Cogito Ergo Non Serviam

Congressional Republicans Yield on Payroll Tax Cut

President Obama released his proposed budget for Fiscal 2013 yesterday. The $3.8 trillion plan was called dead on arrival by the Republicans, as is customary. They labeled it an election year gimmick. Their own proposals have yet to come to light, but they will be just as focused on November's ballot as the president's. However, in all of this, the Congressional Republicans have suddenly become pragmatists about the payroll tax holiday that expires in two weeks. They have decided to approve an extension through calendar 2012 without finding any spending offsets, which will add about $100 billion to the national debt.

As part of their economic philosophy (largely discredited by experience), they believe that any new spending must be offset by reductions in outlays for existing programs. Bearing in mind the overwhelming unpopularity of this stance during the pre-Christmas fight over the payroll tax break, they faced a dilemma: ideological purity versus political reality. The payroll tax break dropped individuals' withholding rate to 4.2 percent from 6.2 percent, worth about $80 a month to the average worker, and failure to act at all would effectively take that much from the average worker; that's a tax hike by any definition.

So, the House Republican leaders issued a joint statement that read in part, "Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue." The spin is unconvincing; they simply knew they had a losing hand, and they wisely folded.

Of course, there are those on the left who don't see a win as anything but a trap these days. Ezra Klein's wrote in today's Washington Post that the GOP has split the payroll tax issue from extending unemployment benefits and maintaining Medicare physician payments, which were another $50 billion in a single bill along with the payroll tax break. Thus, the Republicans have out-maneuvered the Democrats, which is only true if one believes General Custer out-maneuvered the Sioux and Cheyenne at Little Big Horn.

There are several reasons why this paranoid view doesn't hold water. First and foremost, getting $100 billion in tax reduction by giving up $50 billion is a win by any accounting. Second, it's hard to see the GOP denying Medicare physicians a payout as they are Republican clients; it is impossible to believe the party would stiff their supporters and donors in an election year. Third, the Senate Democrats can simply put the unemployment benefits and Medicare payments back into the bill and let the House GOP vote it down. The three are not permanently split up.

This is good news by any standard unless one is a Tea Party dogmatist. The Republican Party used to have a huge streak of pragmatism that made American conservatism plausible. This move by the House leadership suggests that pragmatism isn't dead. The next several months will be full of partisan nonsense and pointless arguments as the parties position themselves for November's elections. After that, however, America's government might just have a chance to start working again -- unless the political class begins the 2014 mid-term campaign in December.

© Copyright 2011 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.



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