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November 30, 2011 8:00 AM A major shift in the payroll debate

By Steve Benen

For months, Republican leaders have balked at the notion of a payroll tax-cut extension. Despite the fact that the tax break was largely their idea in the first place, GOP officials have said they would block President Obama’s request, regardless of the economic consequences.

But Democrats assumed this position was untenable, and they were right. If the payroll break, approved last December, expires at the end of the calendar year, over 100 million U.S. households would see a fairly significant tax increase during difficult economic times — and it would be entirely Republicans’ fault.

Sure, the standard GOP response is that they disapprove of the particulars, most notably the fact that Dems would pay for the tax-cut extension with a modest surtax on millionaires and billionaires. But as David Firestone explained yesterday, that still leaves the GOP in an awkward position.

Are Republicans going to deny the average working family a $1,500 tax break in order to spare millionaires a modest increase? That $1,500 or so, multiplied by every paycheck in America, would have a huge effect on economic growth next year, widely estimated as between 1.5 and 2 percentage points. The tax increase would affect only a tiny fraction of small businesses with employees, despite the endless Republican claims that it would stifle job creation.

If Republicans refuse that deal, it will play directly into Democratic hopes of shaping next year’s election around the increasingly popular theme of income inequality. (“Why did your taxes go up? So that Republicans could protect millionaires.”) They could pay for it with cuts to federal programs that benefit the middle class, which would be self-defeating. Or, if they approve the payroll tax cut without paying for it (as they did last year), that would increase the deficit and reveal the Republican hypocrisy in preferring low taxes for the rich over deficit-cutting.

Either way, the anti-tax crowd is boxed in.

This point is not lost on Republicans, who just yesterday, started changing their tune. After months of saying they would oppose an extension, GOP leaders finally said they would support another year of the payroll break — but only if it’s paid for in some other way.

When push comes to shove, Republicans will do just about anything to protect millionaires and billionaires from having to sacrifice anything at all.

All told, the package would cost about $115 billion in 2012. How would the GOP cover the costs? As of yesterday, Republicans wouldn’t say.

The fact that the GOP has come around on the issue itself, though, set some minds at ease. The Wall Street Journal reports that the Republican reversal “virtually assures that American wage-earners will continue to receive the benefit next year.” Ezra said something similar this morning.

That’s probably correct, though it might be a little premature to assume success on this. There’s a very real chance that the parties will struggle over financing, the effort will collapse, and Republicans, who don’t support the workers’ tax break anyway, will say, “Democrats raised taxes when they rejected our version of paying for the bill.” The media would say “both sides” are to blame because the two parties “wouldn’t compromise,” and the economy will take a very serious hit.

Yesterday’s GOP shift was a major step in the right direction, but the hurdles between here and passage remain significant.

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.

Comments

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  • c u n d gulag on November 30, 2011 8:06 AM:

    Steve wrote:
    "There’s a very real chance that the parties will struggle over financing, the effort will collapse, and Republicans, who don’t support the workers’ tax break anyway, will say, “Democrats raised taxes when they rejected our version of paying for the bill.” The media would say “both sides” are to blame because the two parties “wouldn’t compromise,” and the economy will take a very serious hit."

    Yup.
    Nothing to add.
    Just, you know - yup.

  • stevio on November 30, 2011 8:09 AM:

    New election year car bumper sticker for Progressives:

    "Obama: Spelunker-in-Chief. He caves..."

    He and the dems will pull defeat from the jaws of victory.

    nauseating...

  • berttheclock on November 30, 2011 8:13 AM:

    "the media will say"

    Yes, and how many read Progressive web logs? Obama's approval ratings have hit a low, with the most damaging being his approval falling among Independents. They do listen to the misinformed media. Once again, the Democrats have not been able to get their message across.

  • Brenna on November 30, 2011 8:14 AM:

    Yep, you nailed it perfectly, Steve.

    GOP leaders finally said they would support another year of the payroll break — but only if it’s paid for in some other way.

    The "some other way" part will be come out Mitch McConnell's evil mind. You can be sure it will be a doozy. And you're right, if it's a way dems cannot support, the thugs will blame it all on the dems and wash their hands of it.

    It's a constantly losing battle. And it's getting really old. Either we vote out the thugs and have some sanity again, or we keep them in, plus Romney or Gingrich at the helm, and we have at least two years of God knows what despair ahead of us.

  • just bill on November 30, 2011 8:14 AM:

    this is the winning issue for democrats. do. not. budge. one. bit.

    make 'em squirm.

  • DAY on November 30, 2011 8:15 AM:

    in a sane world, Republicans would be run out of town on a rail.
    In this world, Obama's approval rating is below Carter's.

  • sick-n-effn-tired. on November 30, 2011 8:18 AM:

    Republicans will do ANYTHING to protect millionaires and billionaires from having to sacrifice anything at all.
    Fixed it for you
    The only mission is to get reelected . They do this with the money provided by their millionaire buds . The cash enables many many TEEVEE ads that manipulate a population successfully dumbed down to believe the lies.

  • r on November 30, 2011 8:23 AM:

    Sure, the Rs will pay for it by slashing a program for the poor. And you are right, Steve -- the media will blame the Dems.
    "Republicans will do ANYTHING to protect millionaires and billionaires from having to sacrifice anything at all."

    Don't know why this isn't the only thing out of Dems mouths.

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  • Lucia on November 30, 2011 8:27 AM:

    Everyone else beat me to it: this is not a major shift, it is the GOP playing the same old game of finding a way to blame everything on the Dems, and the so-called liberal media will cooperate.

  • withay on November 30, 2011 8:38 AM:

    just bill and r are right: relentless repetition of the truth. Plus, millionaires and billionaires have HAD those tax breaks for almost a decade now and don't seem to be creating jobs for the rest of us. Trickle down has not worked since Reagan's version. Bumper sticker version: Trickle down ≠ jobs.

    The math symbol may have to be explained though.....

  • Maritza on November 30, 2011 8:47 AM:

    This is how you pay for it. Allow companies who have money overseas to bring that money back to the United States with a 15% tax instead of the 35% tax rate. That will give you more than $150 billion which will pay for the payroll tax holiday.

  • Ron Byers on November 30, 2011 8:57 AM:

    Apparently Obama has isolated himself in the Whitehouse, much the way GHW Bush did in his last year. I suspect that Obama's personality is partly to blame, but so is the utter lack of Democratic surrogates. Where is the Democratic leadership?

    Kids, if we lose this election America will enter a dark place for a generation or more.

  • j on November 30, 2011 8:59 AM:

    So a payroll tax holiday for everyday people must be funded, I must have forgotten -Were the Bush tax cuts ever paid for?

  • chi res on November 30, 2011 9:15 AM:

    New election year car bumper sticker for Progressives:

    "Obama: Spelunker-in-Chief. He caves..."

    Better bumper sticker for (so-called) Progressives:

    Like our Republican Congress? Thank a (so-called) Progressive!

  • BetweenTheLines on November 30, 2011 9:16 AM:

    This movie is getting old

  • Vondo on November 30, 2011 9:25 AM:

    Why haven't we seen the question asked: "If the extension of a small tax break for workers is OK, but has to be paid for with other changes, how are you going offset a huge broad based tax break that expires at the end of 2012?"

    Apples and apples.

  • chi res on November 30, 2011 9:31 AM:

    Apparently Obama has isolated himself in the Whitehouse, much the way GHW Bush did in his last year.

    "When President Barack Obama jets to Scranton, Pa., Wednesday to promote his jobs package, he'll log his 56th event in a presidential battleground state this year, putting him well ahead of President George W. Bush's record-breaking swing-state travel in 2003... Between Jan. 1 and Nov. 17 of his third year in office, Bill Clinton held 40 events over 24 days in the battlegrounds of his time..."

    http://online.wsj.com/article/SB10001424052970204753404577064161615826128.html?mod=googlenews_wsj

  • Kathryn on November 30, 2011 9:51 AM:

    So if the Democratic bill comes up this week with funding coming from the 3.5 tax on income over 1 million dollars, how many Democrats will vote against it? Ben Nelson, for sure, ditto Lieberman (don't count him as a Dem, only a lying sack of sh-t), maybe Tester, maybe Manchin ( all those millionaires in W. Virginia). Anybody else getting sick of this Groundhog Day Senate?

    I got the impression that the OWS was going to occupy Capitol Hill in order to encourage votes for the 99 percent rather than business as usual. Does anybody know if that's going to happen, I live in close suburb and would happily join them? It seems to me that unless thousands occupy the halls of congress, the outcome will be as articulated by many in this blog. Republicans try to "fund" payroll tax by screwing poor in some fashion and the both sides won't compromise theme wins again. Even if thousands occupy, the outcome is not assured but without it, the outcome is painfully obvious.

    Saw spokesman for White House on Andrea Mitchell yesterday, wanted to throttle him. Kept repeating how there is no reason this measure should be turned down as these were Republican ideas, blah, blah, blah......Gene Sperling was the guy I believe. Even Mitchell was frustrated and ended by saying, well I don't think it's going to happen.

  • zandru on November 30, 2011 10:47 AM:

    "only if it's paid for in some other way."

    I move that we pay for the working-folks Social Security Retirement Insurance premium cut-backs by removing the income cap altogether.

    No more cap. Let higher-income earners pay their share. Call your Representative and Senators. Encourage the Democrats to stand firm on this one. If the Repubs are really getting scared by the accusation that "they blocked a middle income tax cut because it didn't benefit only the billionaires", it's time to start putting pressure on them and getting some concessions. - Or at least be seen to be TRYING.

    I'm not going along with the fashionably cynical "the Democrats will NEVER" - the Democrats can learn, AND they can be replaced. Things are changing - we can help them along, or we can help block them, just like the wingnutters are doing. Seriously, which side are YOU on?

  • DTTM on November 30, 2011 11:06 AM:

    @ Bertheclock I was disconcerted by your post about the president's low approval numbers and checked it out. This made me feel better:

    http://talkingpointsmemo.com/archives/2011/11/bogus_stat_alert.php?m=1

    Indeed, if you remove Rasmussan from the mix--always a good idea--PBO is at 44% and about -3.5 approve/disapprove. Essentially unchanged, or slightly better in the last two months. Still work to do, of course, but the jobs report this Friday is going to be better than expected and consumer confidence is raising, so I am hopeful.

  • berttheclock on November 30, 2011 11:30 AM:

    Thanks - I had just seen the ratings up at "Morning Joe", where, Joe loved the drop. What bothered me was the drop on the Independent side, which is critical. Again, thanks for noting Rasmussen. But, again, the media, such as proclaimed on "MJ", had the numbers up with scrolls proclaiming "Lowest since Carter", and, that 40 will be remembered by many viewers.

  • DTTM on November 30, 2011 11:46 AM:

    @ hey berttheclock...no problem. I agree with your concern about the drop with independents, but I think the Joe crowd was referencing Gallup only, so perhaps other polls are not quite as aljarming. Speaking of Morning Joe...wow...what utter crap that segment was re: poll numbers. What an absurd show! I haven't seen it in at least a year.
    Tina Brown: "He doesn't like his job, etc." Romney's business experience good etc. Yikes! What tripe....

  • newtons.third on November 30, 2011 1:12 PM:

    I recently used the calculator at the White House website, and found that I have approximately $1500 tax cut. Without it I would have about $1000 tax bill. Sounds like a $2500 tax increase. Unless I did my numbers wrong.

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