Political Animal


August 30, 2011 2:00 PM About that ‘withholding rule’

By Steve Benen

The House Republicans’ jobs plan is primarily focused on eliminating various federal safeguards, such as limits on how many toxins incinerator operators can burn into the atmosphere. But deregulation isn’t the only thing on the GOP’s mind; the same agenda touches on — what else? — taxes.

From the economic plan House Majority Leader Eric Cantor (R-Va.) circulated yesterday:

3% Withholding Rule Repeal:

Beginning in 2013, federal, state, and local governments will be required to withhold three percent of all government payments made to contractors in excess of $100 million. While the law has been delayed multiple times, its effect once implemented will be massive — causing accounting burdens on governments and potentially harmful cash flow disruptions for contractors and subcontractors across all sectors. Therefore, we will move quickly this fall to repeal this burdensome requirement and relieve construction contractors, medical providers, manufacturers, farmers, and many others providing goods and services under government contracts of the uncertainty the impending law is creating.

Cantor has been talking about this quite a bit lately. As he sees it, the withholding rule “serves as an unnecessary tax increase on those who do business with the government.”

This may seem like inconsequential policy trivia, but given that it’s one of the tax policies Cantor seems to care about most, let’s take a moment to set the record straight.

Who came up with this “burdensome” withholding rule? House Republicans did.

What Cantor calls “an unnecessary tax increase” was actually created by the House GOP in 2005 as a way of playing an accounting game. In effect, Republicans wanted to make it look like they were being fiscally responsible, and used this measure to give the appearance of generating revenue while cracking down on tax cheats. It was a provision in a larger bill called the Tax Increase Prevention and Reconciliation Act of 2005.

Who voted for this “unnecessary tax increase”? As it turns out, 98% of the House Republican caucus did — including Eric Cantor. His memo yesterday says implementation of the measure “has been delayed multiple times”; what the memo neglects to mention is the delays have occurred since the GOP approved the idea in the first place.

If Republicans are going to keep talking about this, the least they can do is explain why they approved the very idea they’re now so eager to eliminate. And while they’re at it, maybe the House GOP can also explain why a withholding rule that hasn’t been implemented is responsible for holding back job growth.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.


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  • c u n d gulag on August 30, 2011 2:10 PM:

    Gee, it's very nice of Speaker of the House Boehner to allow Eric Cantor to become the loudest idiotic voice in the Republican Party.

    Go ahead, let this "Young Gun" keep shooting off his mouth.
    He just makes himself look more and more stupid and unempathetic every time he opens up his mouth.

  • stormskies on August 30, 2011 2:18 PM:

    And I am sure yet again that this with, all the facts laid out, be 'presented' to America via the nightly news = propaganda shows as well as the Sunday propaganda shows. Of course it won't. If at all it would be spun by the corporate hosts of these propaganda shows to somehow be of benefit to the Repiglicans because that what these 'corporate journalists' are paid to to.

    What the fuck. Corporate used condoms such as Brian Williams get paid over 15 million a year, get driven to 'work' in limousines, live behind gated communities with their own security forces, and have their corporate assholes wiped by their servants who pay more in taxes than they do.

    Just whose interests do you think these corporate journalists represent ? Yours ? Mine ? Or the corporations that hire them to do the bidding for them ?

  • drkrick on August 30, 2011 2:25 PM:

    "And while they’re at it, maybe the House GOP can also explain why a withholding rule that hasn’t been implemented is responsible for holding back job growth."

    Uncertainty, of course.

  • DRF on August 30, 2011 2:49 PM:

    This looks like it was included by Cantor almost as filler. This only affects very large government contracts and, therefore, large contractors. It appears to be nothing more than a pre-payment of Federal taxes; this will slightly slow down cash flow for the large contractors, but won't affect their profits.

    And the "uncertainty"? Seems bogus. Of course, one could resolve any uncertainty by allowing the withholding requirement to become effective when scheduled. It's impossible to see how this is going to improve the economy or stimulate job creation. Just another stupid Republican nonsense point.

  • DisgustedWithItAll on August 30, 2011 3:07 PM:

    I didn't think I could be surprised by Republicans anymore. This one is a real doozy. What a bunch of complete assholes.

  • DAY on August 30, 2011 3:11 PM:

    The upside to this carnival of confusion, is that there ain't nobody payin' attention to any of it.
    TeeVee is dancing/idol/nascar, and newspapers are defunct.

  • biggerbox on August 30, 2011 4:01 PM:

    Just out of curiosity, how often are governments at the various levels actually making payments to single contractors in excess of $100 million? (And how many of the recipients are farmers, really?) Who are these contractors?

    Because I'm here to say any time the government wants to write me a check for over $100 million, I'm happy to have them hold some back. I'll make do. At this time of economic crisis, it seems my patriotic duty, you know what I mean?

  • anandine on August 30, 2011 4:14 PM:

    This is a common sequence:
    1) Republicans have an idea.
    2) Republicans pass this idea into law.
    3) A Democrat is elected president.
    4) Republicans blame the new president for the idea and the law.
    5) Some lefties, thinking that Republicans are negotiating in good faith, engage the Republicans in an argument about the merits of the issue.

    Some lefties learn too slow.

  • 2Manchu on August 30, 2011 4:31 PM:

    What year did the GOP pass this? 2005?

    Sorry, that's before Year Zero (1/20/2009), therefore it's Obama's fault.

  • catclub on August 30, 2011 4:33 PM:

    My understanding is that government entities (smaller states, large city school districts) that have payments to contractors (overall) of up to $100M are exempt from the witholding. Not that contracts up to $100M are exempt.
    if contracts up to $100M were exempt it would make the rules about $10k payments nonsense. (not that there is anything wrong with nonsense, mind you.)

  • Luke Coley on August 30, 2011 5:41 PM:

    Actually, Steve, here's the line I think the White House should use on this issue:
    We're delighted that Rep. Cantor has realized the error made by the former Republican majority in Congress and the previous Republican administration. It is a positive development that Rep. Cantor now recognizes that the economic policies followed in the last decade were job killers. We look forward to working with him on correcting many, many more similar errors.

  • nitpicker on August 31, 2011 8:00 AM:

    For the record, Cantor even describes the policy incorrectly. It's for payments of $10,000 or more from all federal and state agencies and cities that make annual payments of $100,000 or more.

  • nitpicker on August 31, 2011 8:15 AM:

    For the record, Cantor even describes the policy incorrectly. It's for payments of $10,000 or more from all federal and state agencies and cities that make annual payments of $100,000 or more.

  • nitpicker on August 31, 2011 8:17 AM:

    Oy. $100,000,000.

  • Patricia R on August 31, 2011 9:35 AM:

    Republicans are very hypocritical!! On one hand they talk about smaller government & getting government out of people's homes, at the same time passing rediculus bills that go directly into people's private lives, ie, anti abortion bills that prevent women from getting assistance when they need it, preventing gays from having equal rights for their families, and so on. THEY need to back off & deal with JOBS!!!