Saturday, December 10, 2011

Herding Cats

Here we are, coming up on the end of the year, and Congress has yet to pass the extension of the payroll tax holiday. You'd think that eleven months before an election passage of such a bill would be a slam dunk, but you'd be wrong. Who's behind the failure to get the bill passed? The Republicans, or at least some of them.

The stated reason for the refusal of some Republicans to back the bill is that it is "fiscally irresponsible." The real reason, one suspects, is that the bill requires the shortfall to be paid for by an accompanying tax on higher earners. For whatever reason, if the bill isn't passed by the end of the month (and the Christmas recess is looming), it will cost members of the middle class about $1,000 next year. Republican congressional leaders are clearly worried about that, but they are having difficulty getting their members in line.

Typically it's the GOP that operates from a singular playbook, particularly on tax policy: Republicans want lower taxes, while Democrats tend to hold a variety of positions when it comes to taxes and economic issues. But the payroll tax debate has left congressional Republicans arguing among themselves.

The GOP disagreements are multiple: They don't think that the break, which lowered the payroll tax from 6.2% to 4.2%, would help job growth next year. They also say it would harm the retirement system, despite claims by the chief actuary, who said it would have no effect. The trust fund would be replenished through spending cuts or, under the Democrats' plan, by taxing incomes greater than $1 million a year.

Then there are Republicans who just do not want to give the president a victory, calling it "Obama's tax cut."

The fact that Flake, like many of his GOP colleagues, backed the George W. Bush administration's tax cuts for high-income earners in 2001 and 2003 but opposes the payroll tax cut provides an opening for Democrats to level accusations of hypocrisy. In 2010, Flake voted against a legislative package that extended the Bush-era cuts and instituted the payroll tax holiday.

So, heading into the 2012 election year, the GOP is about to hand Democrats a very nice Christmas present. Democrats will be able to point to the fiasco and blame it on Republicans who didn't want to help out the middle class.

What a refreshing change.



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