Senate passes two month payroll tax relief: at what cost?
Far too often, Congress passes legislation without considering the real world ramifications of their actions. As you can see from the chart provided by Speaker Boehner which compares the Senate and House provisions, the Senate bill does little to help Americans who are struggling to make ends meet. Furthermore, as Charles Krauthammer points out in his Op-ed, this dreadful legislation creates so much work, and additional cost, that many businesses will struggle to implement this abbreviated tax cut.
When I’m elected to the Senate, I will not compromise my principles to pass legislation that creates more problems than it solves. As an executive and business owner, I know the issues our corporations and small business owner’s face on a daily basis and what we need to do to solve them. We need real tax cuts, especially to the corporate tax rate. In addition, Congress must drastically reduce the cumbersome regulations which have hamstrung American business and hampered our ability to compete in the world market.
By Charles Krauthammer, Published: December 22
Now that Congress has reached agreement on what must be one of the worst pieces of legislation in years — the temporary payroll tax holiday extension — let’s survey the damage.
When George McGovern campaigned on giving every household $1,000, he was laughed out of town as a shameless panderer. President Obama is doing exactly the same — a one-year tax holiday that hands back about $1,000 per middle-class family — but with a little more subtlety.
Obama is also selling it as a job creator. This takes audacity. Even a one-year extension isn’t a tax cut; it’s a tax holiday. A two-month extension is nothing more than a long tax weekend. What employer is going to alter his hiring decisions — whose effects last years — in anticipation of a one-year tax holiday, let alone two months?
This is a $121 billion annual drain on the Treasury that makes a mockery of the Democrats’ reverence for the Social Security trust fund and its inviolability. Obama’s OMB director took Social Security completely off the table in debt-reduction talks under the pretense that Social Security is self-financing. This is pure fiction, because the Treasury supplies whatever shortfalls Social Security faces. But now, with the payroll tax holiday, the administration openly demonstrates bad faith — conceding with its actions that the payroll tax is, after all, interchangeable with other revenue and never actually sequestered to ensure future payments to retirees.
The House Republicans’ initial rejection of this two-month extension was therefore correct on principle and on policy. But this was absolutely the wrong place, the wrong time, to plant the flag. Once Senate Republicans overwhelmingly backed the temporary extension, that part of the fight was lost. Opposing it became kamikaze politics.
Note the toll it is already taking on Republicans. For three decades Republicans owned the tax issue. Today, Obama leads by five points, a 12-point swing since just early October. The payroll tax ploy has even affected his overall approval rating, now up five points (in six weeks) to 49 percent.
The Democrats set a trap and the Republicans walked right into it. By rejecting an ostensibly bipartisan “compromise,” the Republican House was portrayed as obstructionist and, even worse, heartless — willing to raise taxes on the middle class while resolutely opposing any tax increases on the rich.
House Republicans compounded this debacle by begging the Senate to come back and renegotiate the issue, thus entirely conceding the initiative to Majority Leader Harry Reid. But Reid had little incentive to make any concessions. House Republicans would have taken the fall for 160 million shrunken paychecks. Every day the White House would have demanded, in the name of the suffering middle class, that Republicans return from vacation and pass the temporary extension.
Having finally realized they had trapped themselves, House Republicans quickly caved, with help from a fig leaf contrived by Sen. Mitch McConnell.
The GOP’s performance nicely reprises that scene in “Animal House” where the marching band turns into a blind alley and row after row of plumed morons plows into a brick wall, crumbling to the ground in an unceremonious heap.
With one difference: House Republicans are unplumed.
by John Boruff