The GOP Fumbles the Payroll Tax Cut

December 5th, 2011 at 12:00 pm | 115 Comments |

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The Republicans have finally found a tax increase many of them can get behind. Unfortunately it’s the first middle class tax increase in decades. Make no mistake, failure to renew the payroll tax cut would mean a significant tax increase.

If nothing is done, then starting next month everybody who works for a living will have an extra 2% of their pay deducted from each and every paycheck, and everybody will surely notice that.

Someone with a modest salary of $30,000 will lose $50 per month and someone making $60,000 will take home $100 less each month. These are not trivial amounts. The consequences to the GOP will be catastrophic, especially when it still insists on tax cuts for the wealthy.

It is also deliciously ironic that many Republicans are now fighting against something that looks a little bit like the George W. Bush 2005 Social Security privatization plan with the libertarian twist (added by ”Kenyan socialist” Obama) in which workers are allowed to take the same portion of their Social Security tax as under the Bush plan and either invest it in their own pension plan or use it in any other way they want (the Bush plan would not allow the latter option).

Opposition to the payroll tax cut extension is not only bad politics but also bad policy. Not only do Republican objections reveal astonishing double standards, but they are also wrong, and most of them are not very serious.

The only serious objection is that the extension would further increase the already huge budget deficit. Of course, the deficits never stopped Republicans from pushing their own tax cuts, but at least this is not a frivolous argument, even if not entirely sincere (the budget impact is over 3% of the federal budget, i.e. just a bit greater than the combined budget of the three departments that Gov. Perry so famously wants to abolish).

However the biggest problem right now is not the deficit but the economic crisis. Ending the crisis is a much higher priority than reducing the deficit. Incidentally, the impact of the crisis on tax receipts is about four times greater than the revenue that the government will forego if the tax cut in question is extended.

Another version of this objection is that the Social Security tax cut is not offset with spending cuts. Did the Republicans ever insist that their tax cuts could not go into effect unless they are offset with budget cuts? More importantly, spending cuts would offset not only the tax cut but also its stimulating effect on the economy and thus defeat its very purpose.

Many Republicans argue that payroll tax cuts do not create jobs. Once again, do the conservatives have rigorous proof that each and every tax cut enacted by Republicans created jobs? Of course, the objection is blatantly untrue. Workers mostly use their extra income due to the payroll tax cut in two ways. They use the money to deleverage themselves. That’s good since household debt holds the economy down, and full recovery will not start until it is reduced a lot further. And they use the money to increase consumption. That’s great since low consumer demand is precisely what keeps the economy in the moribund state right now and prevents hiring more workers.

Consumption and debt reduction are right now more desirable than savings and investments, and that makes payroll tax cuts a lot more effective than tax cuts on high earners who would use their windfall quite differently than people with moderate incomes.

Another variation of this objection focuses not on the content of the tax cut but rather on its temporary nature, which allegedly prevents it from being effective. OK, then what exactly were Republicans trying to accomplish by temporarily abolishing the estate tax for just one year? The theory that only permanent tax cuts stimulate the desired taxpayers’ behavior is quite popular among conservatives, but it is just an ideological assertion, not a proven fact.

There’s simply not much meaningful distinction between “permanent” and “temporary” tax cuts. Reagan’s top marginal tax rate of 28% was officially “permanent” and lasted for all of three years. The “temporary” Bush tax cuts were enacted over a decade ago and are still with us. In fact the longest lasting tax cut ever is the temporary “one year only” AMT patch. (This nicely demonstrates the fact that in budget matters the word “temporary” is often not a status qualifier but a shorthand for “Yo, CBO! You must pretend that the budget busting spending increases and/or tax cuts we just passed never happened”).

But it is not enough merely for a clear distinction between permanent and temporary tax cuts to exist – the taxpayers need to be aware of them! And here we have a problem. Ordinary Americans do not follow politics very closely, and one of the best informed and politically active demographics happens to be the elderly who do not work and thus do not get any payroll tax cut.

Among people who actually enjoy this tax cut, roughly half never or almost never vote, and either a very significant percentage cannot name the House Speaker and the Senate Majority Leader,  cannot name their own Representative, cannot identify their own income tax bracket etc. It is a safe bet that a majority of them do not know that the Social Security tax cut is temporary.

Inasmuch as people are going to be aware of the fight over extending the payroll tax cut, it is necessary to remember that we are in the first half of the all important Christmas shopping season and people are trying to figure out how much they can afford to spend and what credit card balances they can cope with come January. Telling them now that starting in January an extra 2% of their pay will be deducted from their paychecks could seriously reduce sales and damage the economic recovery. Would not doing so be, to borrow a word from Rick Perry, really be “treasonous”?

Recent Posts by Andrew Pavelyev



115 Comments so far ↓

  • icarusr

    “The only serious objection is that the extension would further increase the already huge budget deficit.”

    Fail. The only objection, serious or not, is that the n****r in the White House is behind it.

    • paul_gs

      And you have evidence of this? Or, and as is more likely, are you simply talking out of your backside?

      • YuriPup

        MCCONNELL: “The single most important thing we want to achieve is for President Obama to be a one-term president.”

        • paul_gs

          Of course Repubs want Obama to be a one termer. They wouldn’t be Republicans if they desired otherwise.

        • Graychin

          Paul, you are being willfully oblivious to the fact that defeating Obama is “the single most important thing” the Republicans want to achieve.

          Not national security. Not tax reform. Certainly not getting the economy back on its feet before the election.

  • more5600

    The Republicans want to tank the economy to win the Presidency, that explains it all. Period.

    • paul_gs

      Your comment makes no sense.

      • Nanotek

        it does to me

        lex parsimoniae

      • Graychin

        “The single most important thing we want to achieve is for President Obama to be a one-term president.”

        - Sen. Mitch McConnell to the National Journal, October 2010.

        Based on that, and on the Congressional Republicans’ obstruction of anything and everything that might actually help the economy, plus their stubborn insistence on job-killing austerity during a recession, why isn’t it reasonable to conclude that Republicans would “tank the economy” as a means to their end?

        Paul, you are the one who isn’t making sense.

        • paul_gs

          And if Repubs did tank the economy, exactly how would this improve their election chances?

        • ottovbvs

          Paulie…did you learn to ask incredibly stupid questions at school or is it an inherited skill?

        • Graychin

          They believe that Obama will be blamed. Hell, they will do their best to blame Obama for the mess they created and then tried to prolong.

          Clear now?

        • more5600

          Oh dear, a political neophyte is among us. The incumbent is always held to blame for a bad economy, Politics 101.

        • Nanotek

          “And if Repubs did tank the economy…”

          again?

  • ottovbvs

    But Andrew surely you know that when Republicans play those games where they show that the lower paid don’t pay taxes they EXCLUDE payroll taxes?

    “Telling them now that starting in January an extra 2% of their pay will be deducted from their paychecks could seriously reduce sales and damage the economic recovery.”

    Rest assured Andrew they are going to be told by the Democrats who are the authors of this tax increase (It’s for this reason I think there’s a fair chance the Republicans will blink).

  • jdd_stl1

    “Workers mostly use their extra income due to the payroll tax cut in two ways. They use the money to deleverage themselves. That’s good since household debt holds the economy down, and full recovery will not start until it is reduced a lot further. And they use the money to increase consumption. That’s great since low consumer demand is precisely what keeps the economy in the moribund state right now and prevents hiring more workers.

    Consumption and debt reduction are right now more desirable than savings and investments, and that makes payroll tax cuts a lot more effective than tax cuts on high earners who would use their windfall quite differently than people with moderate incomes.”

    There you go again. Trying to use logic and reason to argue with the ideology
    of the Republicans. It just doesn’t work. They follow an ideology that the
    tribal leaders dictate. The economy is struggling because of:

    1. Obama is in the White House.
    2. Over-regulation
    3. Uncertainty
    4. Job creators (the wealthy) are carrying such a huge tax burden.

    • Ann Thomas

      If we look closely, the 2011 “wave” election of Republicans/Tea Partiers halted what was a steady improvement in the jobs picture-by design ofcourse. I blame Obama and Democrats for not pointing out the obvious before the election slaughter. These “cuts” applauded by the Tea Party=jobs killed. As a teacher, I witnessed those cuts first hand. Talented teachers and teacher aides let go. Security officers at our high schools-gone. Counselors cut, etc. Recently, the Republicans offered their plan to pay for the payroll tax cut: freezing salaries of government workers and cutting 200,000 government jobs. And we wonder why they won’t support the jobs bill? They actually put these things on paper. Why not put up a banner everywhere that reads: “We’d rather cut 200,000 of your jobs than see a small tax on the rich.” It’s political suicide but they can’t stop themselves because:
      A) Norquist is God to them
      B) They detest Obama so much and refuse to support anything he proposes-this hatred blinds them from their own stupidity
      So much for country first! Hope Democrats hammer them hard on this! They are making no sense. Kyl says he is against it because “it must be paid for” but is now threatening to only support it if Bush tax cuts are extended which aren’t paid for! Does he realize how silly he sounds???

      On a similar note…Quote of the day:

      “I’ve been watching some of these Republican debates and they’re just terrible. Terrible. It’s embarrassing for me as a Republican to watch this stuff.”

      – Former Sen. John Danforth (R-MO), in an interview with KTRS.

  • ZombieTory

    This is beyond schizophrenic, it’s down-right self destructive.

    The fear of communism degenerated into hostility towards socialism, degenerated into an antipathy towards progressive taxation and has now seemingly mutated into a desire for a regressive tax structure. What’s going on?

    • LauraNo

      Mass-insanity? Or maybe it’s mass-hysteria? ‘They’ are ‘losing’ ‘their’ country, after all!

    • gover

      I think that you are over analyzing this. It’s not ideologically driven, they just don’t want to pay any taxes. They’re good with you or me paying taxes, but no taxes for them. Since Kennedy, the top marginal rate has come down from 90% to 35%. Doesn’t keep them from wanting to drive it further down. Plus we reduced their capital gains and estate taxes, and they still want more there too.

      The plan is to drive all income to the top and all taxes to the bottom. What could possibly go wrong?

    • NRA Liberal

      “…The fear of communism degenerated into hostility towards socialism, degenerated into an antipathy towards progressive taxation and has now seemingly mutated into a desire for a regressive tax structure. What’s going on?…:”

      What’s going on? What’ s going on is, we won the Cold War and conservatives no longer had to compete with socialism. All those bones that were thrown the workers–thus creating the American middle class—were intended to prevent a revolution in this country; something which seems ridculously farfetched now, but was once thought a distinct possibility.

      Now we’re just seeing the reality behind the conservative mask. A regressive tax structure is what they’ve always wanted. Why should our ruling aristocrats pay taxes. They create jobs! They don’t need government! Let the little people pay for government if they’re so damn attached to it!

      The Bush tax cuts and robbery of the SS trust fund were all about giving back to the wealthy the money unfairly stolen from them over the previous 70 odd years by the parasitic proles.

  • booch221

    They use the money to deleverage themselves.

    I wish people would stop using this term. Most people don’t understand what deleverage means. I had to look it up the first time I came across it several months ago. Although this article explains it in the very next sentence, most don’t.

    Why not just say they will use the money to pay down debt?

    • LauraNo

      Well, also, isn’t it the case that not all (or even most) household debt is of the leveraged type?

      • booch221

        The author doesn’t seem to think so:

        Workers mostly use their extra income due to the payroll tax cut in two ways. They use the money to deleverage themselves. That’s good since household debt holds the economy down, and full recovery will not start until it is reduced a lot further. And they use the money to increase consumption.

    • indy

      Actually, deleverage isn’t really the right word to use at all. It really means selling an asset (or assets) in order to eliminate some underlying debt. Paying down principal over time with extra cash on hand isn’t quite the same thing, but it seems to have entered the popular lexicon since 2008 in that way and it’s close enough I guess, so c’est la vie.

  • forgetn

    There are many reasons why the GOP is against the Payroll taxes cut extension; some are logical others are not.
    First, the people who gain from the tax cut do not contribute to the GOP’s electoral coffers. Second, the Payroll tax cut would be paid for by increasing some taxes on the wealthy (No new tax pledge).

    There is simply no political room to slip that one trough .

    The GOP’s opposition to the payroll tax cut extension and the elevation of Gingrich to the top of the GOP roster are the best Christmas gift the Republicans has given the democrats in a long time.

    Joking aside, the election cycle prohibits any member of the GOP of raising tax on the wealthy for any reason which soever! The Democrats much be licking their chops right now.

  • HighCountry

    On one level, you could say that the GOP has already won this argument because they now have the Democrats arguing FOR a tax cut. Reminds me of the old Bugs Bunny cartoon with Daffy Duck and Elmer Fudd, arguing whether it’s rabbit hunting season or duck hunting season:

    Bugs: “Duck season!”
    Daffy: “Rabbit season!”
    Bugs: “Duck season!”
    Daffy: “Rabbit season!”
    Bugs: “Rabbit season!”
    Daffy: “Duck season!”

    And then Elmer blows Daffy’s head off.

  • Graychin

    Honestly, I don’t know how the Congressional Republicans can bear to look at themselves in the mirror every morning.

  • armstp

    We all know the Republican memo these days:

    1) torpedo the economy ahead of the 2012 election

    and

    2) if Obama is for it then automatically the GOP is against it. Don’t matter what it is….

    Anyone who would trust the Republicans with the economy should have their head examined.

    • Cyberax

      I think Obama should reintroduce a bill that categorically FORBIDS Republican members of Congress to commit a suicide under Christmas trees.

      Watching the ensuing brain explosions would be entertaining.

  • LFC

    This is what a political party looks like when it’s approach to governing is 100% tactics and 0% policy. Reality no longer enters into the equation.

  • sdspringy

    Well first lets all applaud the fact that Dems/Libs now all agree that tax cuts stimulate the economy. That is an amazing turn in their ideology.

    Tax Cuts Stimulate the Economy. WOW.

    Now why is this a new bipartisan fact?? Well generally people are able to use their money more EFFECTIVELY than the government. Isn’t wonderfull and all sorts of feel good when Dems/Libs now think like Republicans.

    Now even more important, follow if you can, why do Dems now believe the only way to stimulate the economy through tax cuts is by cutting the payroll tax and not the income tax rate??????????

    Anyone, raise your hands if you have the answer, get your finger out of your nose Otto/Terry/Teabag. The reason is everyone in the middle pay NO INCOME TAX. Thats right if you are in the 60K and under with a family you pay NO INCOME TAX.

    You may now be asking why is that. Well thanks to Obama, a tax plan that he extended to 2012, which the Dems HATED because the plan was originally enacted by the Evil Bush, has kept the middle class from paying income tax and shifted the burden to the wealthy, or as this Liberal blog site to refer to as the Evil Wealthy.

    Now if your new to American politics you would think that the goal of Democrats and their new found LOVE for tax cuts is to help the poor and struggling Middle Class. You would be excused for your ignorance however because this is always about CONTROL not assistance.

    Social Security is a program funded through a dedicated tax, thats right, the payroll tax. What happens if you promote a way to disable, defund, and cripple this massive public program via a tax rate reduction because as we all know Dems/Libs have the absolute best intentions and only have our best interest buried deep in their hearts, well you have even more people dependent on you’re good intentions.

    Thats your lesson for today Dems/Libs are twisted and evil with the one goal which is to have you dependent on their good intentions. Twisted little bastards.

    • Rick123

      Well first lets all applaud the fact that Dems/Libs now all agree that tax cuts stimulate the economy. That is an amazing turn in their ideology.

      Not exactly. The key difference is who spends the money when a tax cut occurs, and how quickly it goes back into the economy. When middle class people get a tax cut, they immediately spend the extra money in their pay checks, which increases economic growth. When rich people get a tax cut, they don’t spend it. They might save it or invest it, but this has a delayed effect on economic growth (if it leads to growth at all).

      • sdspringy

        Yes, great economic theory, investing has no immediate affect on the economy. Perfect Democrat thinking. Better stop that INVESTING in GREEN energy, obviously NO effect on the economy.

        The Middle Class is going to use that 50 bucks to offset the rise in the price of everything they purchase at the grocery store, gas pumps, and electricity bill. If you believe the 50 bucks a month enables economic stimulus through the purchase of cars, big screen tvs, and vacations you have a wacky economic reality.

        • Rick123

          Apparently, you can’t read. I never said there would be “NO” effect. I said a delayed effect (or no effect at all).

          When I save my money with a bank, they will typically lend that money out to other people, which creates economic activity. But, the bank might hold the money in reserve, which does nothing to grow the economy. This is what happened during the financial crisis. Banks stopped loaning money to people.

          When I invest in the stock market, unless my money is going to buy stock as part of an IPO, I am not giving my money to the company itself. My money is going to buy the shares from another investor, who already owns the shares. This doesn’t create economic activity, with the exception of the traders fees and the profit made by the seller. Again, during a crisis, the market is tanking and people don’t invest like they normally would.

          So, relatively speaking, there is greater bang for your buck when you give tax cuts to lower and middle income people, in terms of stimulating economic growth.

          By the way, if tax cuts for the wealthy were so effective, we should have had a boom after the Bush tax cuts. But we didn’t.

        • sdspringy

          I’m having serious doubts about you Rick. First a bank is required to have reserves. Not just your money but their own.

          Secondly if you want to create economic activity, then someone has to START, a business. Where do they go, a bank that better have the reserve necessary to allow lending. Then you have to have someone with money to qualify for that loan. Every borrow money to start a business, not easy. Guess what Middle Class wage earners rarely do. So some one with money or backing is the ONLY one that is going to provide that economic stimulus, buying equipment, employing individuals, creating cash flow through the bank to increase lending.

          A payroll tax rate deduction will not STIMULATE the economy, but Walmart will enjoy the extra food business.

        • indy

          I’m having serious doubts about you Rick. First a bank is required to have reserves. Not just your money but their own.

          Uh, no. In the United States the reserve requirement is the ratio of required reserves to net transactions accounts. It is merely some minimum percentage of the CUSTOMERS’ notes and deposits that cannot be lent and must remain in the bank.

    • ottovbvs

      “Well first lets all applaud the fact that Dems/Libs now all agree that tax cuts stimulate the economy. That is an amazing turn in their ideology.”

      Actually Springy it’s a central tenet of Keynesian economics that well directed tax cuts can be stimulative during a recession. However, this doesn’t mean they’re are a universal good in all circumstances. A nuance that has probably escaped you since you’re totally ignorant of the subject.

      “Thats your lesson for today Dems/Libs are twisted and evil with the one goal which is to have you dependent on their good intentions. Twisted little bastards.”

      Today’s lesson in rationality from Springy. Let us all give thanks to the lord.

      • sdspringy

        Oh Teabag, don’t know which login to use today, depends on your medication and bed exit to determine you’re personality for the day.

        Obviously you don’t know that Dems/Obama have no idea what you’re talking about. They have expanded/extended every Bush tax plan and enacted their own further tax rate deductions. So where is the “well directed tax cuts”???? Either you must be referring to the Bush tax plan or you don’t have a clue what you are talking about.

        • ottovbvs

          “Oh Teabag, don’t know which login to use today, depends on your medication and bed exit to determine you’re personality for the day.”

          Today’s second lesson in rationality from Springy.

    • armstp

      sds,

      What a load of crap your comment is….

      “Well first lets all applaud the fact that Dems/Libs now all agree that tax cuts stimulate the economy. That is an amazing turn in their ideology.”

      Can you give us any examples at all where any Dems or Libs have ever said that tax cuts do not stimulate the economy? Dems cut taxes on both the federal, state and local level all the time. Republicans do not own the tax issue. Both Obama and Clinton cut a lot of taxes. Many Democratic governors have cut taxes over the years, etc. etc. etc. Almost all Republican Presidents have raised taxes. No one party owns the tax issue. The Dems are just smart about taxes.

      The entire Democratic argument is about what taxes to cut, by how much, when and whether it is the only thing to do. Dems also argue that unpaid for tax cuts balloon the deficit, something the GOP is only now coming around to, although most seem to think that tax cuts result in increased tax revenue, which is BS and never proven.

      The Dems have a lot of flexibility in their tax policy ideas. They are not affraid to raise and lower them when need, which is the responsible thing to do. It is the GOP that has taken taxes as a geniue policy tool off the table.

      “Well generally people are able to use their money more EFFECTIVELY than the government.

      Do you have any proof of this statement, that the government uses tax revenues any more or less efficiently than the private sector? How do you figure? The reason in most case we collect taxes and even have government is because there are many things like building roads, funding a military, stabilizing the economy, providing a social safety net, etc. that individuals and the private sector are just not as efficient at doing. Just look at healthcare. It is pretty clear that government run healthcare systems are much more efficient than private healthcare systems.

      “Now even more important, follow if you can, why do Dems now believe the only way to stimulate the economy through tax cuts is by cutting the payroll tax and not the income tax rate??????????

      Anyone, raise your hands if you have the answer, get your finger out of your nose Otto/Terry/Teabag. The reason is everyone in the middle pay NO INCOME TAX. Thats right if you are in the 60K and under with a family you pay NO INCOME TAX.”

      You are a real ignorant moron. First this is only a temporary tax relief measure that is designed to have the most immediate economic impact. Payroll tax cuts are more efficient at meeting those requirements than cutting income tax rates. By the way payroll tax cuts are also income tax cuts.

      Second, do you really believe that if you earn $60,000 or less you pay no income tax. How do you figure? What tax code are you reading?

      “You may now be asking why is that. Well thanks to Obama, a tax plan that he extended to 2012, which the Dems HATED because the plan was originally enacted by the Evil Bush, has kept the middle class from paying income tax and shifted the burden to the wealthy, or as this Liberal blog site to refer to as the Evil Wealthy.”

      Do you actually pay attention to the debate on the Bush tax cuts? Do you have any clue whatsoever about what the issues are?

      > Bush cuts taxes at a time of war. Never done before.
      > Bush cuts taxes and does not pay for them, driving the deficit and debt to record levels.
      > Bush cuts taxes and about 50% of the benefit of those tax cuts goes to the top few percentage of income owners. The benefits were not equally distributed among the population, and therefore both income and wealth disparity hits all time highs, with 10 very good years going to the very wealthy and the rest or the 98% find things worse off.
      > Bush cuts taxes and then has the worst jobs record of any President in recent memory. The Bush tax cuts had very little of a positive impact on the economy.
      > Etc. etc. etc.

      “Social Security is a program funded through a dedicated tax, thats right, the payroll tax. What happens if you promote a way to disable, defund, and cripple this massive public program via a tax rate reduction because as we all know Dems/Libs have the absolute best intentions and only have our best interest buried deep in their hearts, well you have even more people dependent on you’re good intentions.”

      The amount that SS will be impacted by these temporary reductions in payroll taxes is negligible. Run the numbers. As usual you provide zero context with your Republican/”conservative” talking points. Your BS is getting very old.

      • sdspringy

        Lets just review one glaring, pathetic example of your ignorant rant.

        Bush cut taxes during a time of war.

        Well this is a perfect example of your stupidity. Obama has been cutting and extending every tax cut he can get his hands on. Guess what Stupid, we are still at war.

        Pull you head out of that small dark hole between your legs and take a deeeep breath.

        • armstp

          There is a very big difference between Bush cutting taxes during a time of war, when the war spending was ramping up and the economy was stable, and Obama cutting taxes when war spending is ramping down and we have had a massive recession and 9% unemployment.

          Are you really that simple?

        • sdspringy

          Hey stupid, Obama ramped up in Afghan, remember. Cut taxes and played golf more than anyother President during a war. Perfect. Keep digging, you will reach the desired 6ft depth very soon.

        • armstp

          Sds,

          Again you need to check the facts. Even with the effort in Afghanistan intensify war spending has actually gone down, because the decrease in spending related to Iraq more than offset the increase in spending in Afghanistan.

          Do you actually look at any real analysis and numbers or do you constantly talk out of your A$$?

          “FY2008 Bush administration has proposed around $190 billion for the Iraq War and Afghanistan”

          “FY2012 Obama administration has proposed around $131.7 billion in additional funding for the Iraq War and Afghanistan.”

          http://www.fas.org/sgp/crs/natsec/RL33110.pdf

          You fail to address the rest of my comment. The bulk of my comment.

        • ottovbvs

          “Pull you head out of that small dark hole between your legs and take a deeeep breath.”

          Springy’s third lesson of the day in rationality.

        • animal

          He just tore through your entire argument and that is your response?

          You are a JV benchwarmer.

      • sdspringy

        Second duchebag, income/payroll tax cuts have the same impact, they both reduce the amount withheld from the paycheck.

        If you want to stimulate the economy then reducing the income tax rate would provide a larger tax refund to those idiots who let the Federal Government hold their money at Zero interest and then writes a check in April. Those fools then buy a big ticket items, for you dummies, provide stimulus.

        If you want absolutely no stimulus then piss a small amount every month into a person paycheck. They don’t see it, they don’t save it, they just spend it on groceries.

        And to Democrats like you that makes perfect sense, barely get by till we decide to improve you’re situation

        • Rick123

          Hey dummy, “you’re” means “you are”. It’s a contraction. Grammar and economics are apparently not *your* strong suit.

        • sdspringy

          If you think grammer problems are a big issue what do ya think when someone as stupid as that blows your intelligent, or so you believe, argument right out of the water.

          You must feel really wimpy. You complain about grammer and can’t explain economic theory. How does that make you feel, small or are you and you’re (like that) feelings ok??

        • Secessionist

          Not to pile on here, but there is another typo in your comment. It’s grammar. When you’re writing fast, it’s easy to mistype words like they’re, their, there, its, it’s, ect. People like to pick on typos and call them errors.

    • LFC

      “Well first lets all applaud the fact that Dems/Libs now all agree that tax cuts stimulate the economy. “

      They didn’t. They agree, and have agreed for ages, that tax cuts CAN stimulate the economy. This is particularly true during a recovery from a massive financial collapse. It’s also particular true of middle class tax cuts (instead of high income tax cuts) given in small recurring amounts (compared to the blunder of the Bush rebate checks).

      “That is an amazing turn in their ideology.”

      Another mistake on your part. The Democratic take on tax cuts isn’t ideology as compared to, say, you or every Republican Presidential candidate currently running or virtually every Republican in Congress (all tax cuts, all the time!). I guess since you view tax policy as ideology, you think everybody else does as well. It’s why you view well considered opinions and practical policy proposals of a very narrow type under a specific set of conditions to be ideology.

      • sdspringy

        Actually LFC don’t you find the whole tax issue full of double speak. Dems/Reps the whole process is upside down yet we keep pointing fingers and yelling at eachother.

        What have we created?? A tax code at is broken, GE produces a 57 page tax return reporting 14BILLION in profit and pays NO TAXES.

        Now who do we blame, Dems/Reps, or us for believing that any of them in Washington care what happens as long as they are reelected. Either a tax REFORM has to occur or a term limit has to go into affect before any of this is fixed.

        Gotta go

    • LauraNo

      You have a very shaky grasp of reality.

    • sweatyb

      Another successful troll by sds!

  • Rob_654

    But this is EXACTLY what Republicans believe.

    They believe in giving the wealthy what they want – without strings.

    They do not believe in doing anything for the Middle Class because that’s Socialism and Must Be Paid For.

    The only difference now is that Republicans are actually being quite honest about what they believe instead of trying to hide it.

    Its like when Pat Robertson warned Republicans about speaking on extreme positions – note that Robertson did not say he disagreed – he just knows that even though you hold the extreme positions – you just can’t talk about them and remain viable.

  • valkayec

    Andrew, thank you for a serious and logical blog post, rather than a partisan rant. I much appreciate it.

    Now, here’s my thoughts. I understand the “why” of the payroll tax cut as well as its being made up from the general budget so the SS funds won’t be shorted the revenue. However, would it not be better for the GOP to offer as their condition for the extension an overhaul of the tax code a la Reagan’s overhaul and bringing Simpson-Bowles to the floors of both houses?

    By the way, the idea of not granting the extension because a tiny increase on the wealthy would violate Norquist’s no tax pledge is simply in error. Norquist has said it’s okay to increase taxes in one area only if taxes are decreased equivalently in another area. Thus, no net new increase in revenues.

    Listening to the GOP on this issue reminds me of all of the GOP Congressional leaders’ actions just before and following the 2010 election, i.e. going to Wall St to assure them the GOP would prevent an tax increases on them and vowing to overturn Dodd-Frank; lambasting the poor…and calling the poor “lucky duckies”…because they don’t pay any employment taxes when they are the ones who wrote that tax law; stating the poor are not really poor because they have expensive modern devices such as refrigerators; stating the OWS protesters are anti-American for protesting while the Tea Party protesters were truly American patriots standing up for their rights. I and others here could go on ad infinitum on the hypocrisy of the current GOP.

    The GOP could try reading and thinking seriously about what multi-millionaire venture capitalist and serial entrepreneur wrote at Bloomberg last week: http://www.bloomberg.com/news/2011-12-01/raise-taxes-on-the-rich-to-reward-job-creators-commentary-by-nick-hanauer.html

    • LFC

      “However, would it not be better for the GOP to offer as their condition for the extension an overhaul of the tax code a la Reagan’s overhaul and bringing Simpson-Bowles to the floors of both houses?”

      I think that at this point there’s really no time to accomplish a tax code overhaul. This would be a massive undertaking. If it was a GOP goal to trade tax code simplification for rate changes, they would have been working on it for years at this point.

      I’m not sure about the state of Simpson-Bowles and if it’s actually in a shape that could be voted on, but since it contains tax increases it is dead to the GOP. Remember that every GOP Presidential candidate said a 10:1 cuts/increases deal was unacceptable.

      • valkayec

        I mention them because they’ve become the GOP’s latest talking points, particularly in opposing the tax cuts under discussion. So…

        - the tax code overhaul. Yes, it does take a long time to reform/rewrite the code but the GOP could make doing so – beginning work on it immediately after the Christmas break – a condition of approval of the payroll tax cut. Moreover, they could start with both the Simpson-Bowles recommendation as well as the original Reagan tax plan.

        - the Simpson-Bowles plan. It’s nowhere near legislative language, but it could be written into that language by the various committees, discussed and argued in committee and brought to the floor. If the GOP were serious about Simpson-Bowles, as they continuously say now, one would think they’d use the payroll tax cut to insist upon getting Simpson-Bowles going.

        Of course, I’m taking them at their word that they really want to accomplish these tasks rather than just use them as talking points to bash the Dems and keep from passing the temporary payroll tax cuts.

        I know, I’m being silly, right? Expecting the GOP Congress to actually say what they mean?

        • ottovbvs

          “the Simpson-Bowles plan. It’s nowhere near legislative language, but it could be written into that language by the various committees, discussed and argued in committee and brought to the floor. If the GOP were serious about Simpson-Bowles, as they continuously say now, one would think they’d use the payroll tax cut to insist upon getting Simpson-Bowles going. ”

          The Simpson Bowles plan as many economists have pointed out is full of magic asterisks (econ term: meaning pious hopes not hard policy choices).

  • Secessionist

    The Democrats should continue linking middle class tax cuts with increases on high income earners. This formula would eventually destroy Republican credibility on the tax issue by forcing the Republicans to repeatedly kill tax cuts. Unfortunately, the Democrats are too reluctant to cut taxes.

    • ottovbvs

      “linking middle class tax cuts with increases on high income earners. …..Unfortunately, the Democrats are too reluctant to cut taxes.”

      I guess this was why the Democrats wanted to preserve the Bush cuts for the middle class but let them expire on the wealthy……Alzheimers, confusion or simple stupidity?

      • Secessionist

        They wanted to preserve middle class tax cuts passed by Republicans in the first place and opposed by Democrats.

        Alzheimers, confusion, or stupidity?

        • LauraNo

          If we’re being honest, the middle class tax cuts were only included by Bush in order to accomplish the larger tax cuts for the very wealthy. We all know this, and this is why they are not considered to be a republican policy preference, because they ARE NOT. Democrats would probably have voted for Bush’s tax cuts if they were just for the middle class, but they would have PAID FOR THEM.

        • Secessionist

          Yeah, you’re right about that; the GOP support for middle class tax cuts is definitely window dressing for their real agenda — tax reductions for and wealth transfers to the high income earners. However, I don’t recall the Democrats making any counter-proposals back then to cut taxes only for the middle class. But maybe they did.

        • balconesfault

          At the time Bush’s tax cuts were passed, the economy needed to continue on our debt-reducing pathway more than we needed a major economic stimulus. The middle class could have done well through the 00′s without the tax cut … and it is even possible that without the additional liquidity pushed into the system with the tax cuts and Greenspan’s interest rate cuts, the Bush Bubble wouldn’t have grown and burst so spectacularly.

          Which, of course, would have left middle class Americans FAR better off today than they are, in general.

        • ottovbvs

          “They wanted to preserve middle class tax cuts passed by Republicans in the first place and opposed by Democrats. ”

          Well they were probably opposed by Democrats because in the circumstances at the time they didn’t make a lot of economic sense and subsequently made a major contribution to running up the deficit. Lowering taxes on some or all classes of taxpayer or raising them is entirely a matter of the economic and fiscal circumstances prevailing at the time. Anyone who thinks otherwise cannot use the Alzheimer’s defense which leaves you DSP with only confusion about fiscal policy or stupidity. Which would it be?

  • IntelliWriter

    The Republicans never saw a tax cut they didn’t like, until Obama proposed it. Now it’s demonic and might actually help the economy and Lord knows we can’t have that especially with the recent dip in the unemployment rate. It would derail their one true objective of making Obama a one-term president….the American people be damned.

    • ottovbvs

      Because this is potentially so toxic for the Republicans I suspect they will blink. Either way in strictly political terms it’s big win for the Dems as Andrew points out so why look a gift horse etc.

  • jamesj

    I’ve said it before and I’ll say it again: Democrats have already co-opted most of the pragmatic policy stances that we Republicans took 30 years ago. It didn’t happen as the result of a political strategy. Opinion simply shifted across the country over the course of a few decades. We won a war of ideas. But this has been bad news for the modern Republican party. As the party moves rightward to differentiate itself from the Democratic party it moves farther from reason and farther from traditionally Conservative modes of thought.

    My party now votes for unfunded entitlements and unfunded tax cuts that raise the deficit in massive ways while they control the presidency and congress, then complains that Obama is responsible for the deficit while utterly refusing to restore taxes back to their original levels. And now we’re seeing them oppose a tax cut simply because most reasonable people (including the president and a majority in the Senate) think it is good policy. These are the same people who ran the nation’s credit through the mud to score cheap political points.

    We’re well beyond any pragmatic debate about real ideas folks. We’re witnessing a bitter blood feud waged by the Republican Party. They’ve come unhinged and it is truly embarrassing for some of us who used to vote Republican on a regular basis. I see no local Republican candidate and no national Republican candidate that I am eager to vote for any time soon. I don’t think the folks moving the party in this mindless reactionary direction understand the long-term consequences of their actions.

  • Margie

    If the payroll tax cut does not get extended, my husband and I will make up the lost income by getting my 9 year old a job cleaning bathrooms at his school so we’re good either way.

    • LauraNo

      I’d like to know what the number of people who will become eligible for food stamps and/ or Medicaid/ welfare will become after their taxes are raised. I know that many are barely getting by…

  • zaybu

    Wow, the ignorance on this thread is astounding.

    Here’s a little lesson in economics.

    When the economy is in a downward spiral (this is characterized by several quarters of decreases in the GDP and increases in the unemployment rate), what is needed is monetary expansion to increase demand. This can be done by:

    1) decreases in the interest rate,
    2) decreases in taxes,
    3) increases in government spending.

    The result of any combinations of these programs will put more money into the hands of consumers, make it easy for business to expand, and put more people to work. The net effect on the government is that there will be fewer people on government assistance (a decrease in cost) and more working people paying taxes (an increase in revenue). The deficit will decrease, and may even turn into surplusses.

    Needless to say, when the economy is in an upward spiral (this is characterized by several quarters of increases in the GDP and major increases in the inflation rate), what is needed is the opposite of the above, that is, monetary contraction to decrease demand by,

    4) increasing the interest rate,
    5) increasing taxes,
    6) decreases in government spending.

    These measures are necessary to counter the business cycle of bust (recession) and cycles of boom (inflationary pressure).

    And lastly, but not the least, the problem in the past is that governments were unwilling to use the surpluses to pay off the debt when the economy was improving: they either created more programs ( mainly Democrats) or gave generous tax cuts (mainly Republicans), so that instead of reducing the national debt, we witnessed continued increases of the debt — effectively digging the country into a bigger hole, leaving it inadequately prepared for the next downturn.

    EDIT: You could add (3*) Printing more money, (6*) burning the green stuff, but governments don’t do that anymore. Instead they use quantitative easing. If you don’t know what it means, Google it.

    • ottovbvs

      “Here’s a little lesson in economics.”

      The President on Republican obstruction.

      http://www.msnbc.msn.com/id/21134540/vp/#45557086

      • zaybu

        The Republicans are counting on their base to be ignorant of economic principles. And so they get away with their obstruction.

        OTOH, the Democrats are not doing a good job in their PR department.

        Plus they are handicapped by the commie, Muslim Kenyan in the White house.//sarcasm off.

    • Rob_654

      Of course you are correct, but there is an entire group of people in this country who simply cannot believe that it works this way.

      The argument for tax cuts to spur job creation is funny if it wasn’t so sad with high unemployment.

      I was speaking to a friend whose father owns a construction company and even if they cut his taxes he isn’t going to hire anyone because there is no work to do – but if he saw demand go up – even if they raised his taxes he would certainly start hiring people so he could start building again.

  • Houndentenor

    To give them the benefit of the doubt, if they want spending cuts to offset the tax cuts, then I support that. Find spending cuts that can pass as an amendment to the bill (not cuts just to Dem pet projects guaranteed to torpedo the bill if the amendment is attached) and get it done. Surely the grown-ups in both parties can come up with some spending cuts. How about a wage freeze for Congress? That would certainly be popular with voters. Better yet, rolling back their last pay increase and cutting some of their own benefits. That’s not enough obviously, but it would be a good start and an act of good faith as they asked others to give up benefits so we can cut the deficit.

    • think4yourself

      @ Hound: “Better yet, rolling back their last pay increase and cutting some of their own benefits.”

      I love it (but will never happen on either side of the aisle).

      I have always felt that the President ought to announce that in order to do his part to balance the budget, that he would take a 15% pay cut and announce that the VP & Senate Majority Leader had agreed to a 10% pay cut. Challenge the House Speaker to take a 10% pay cut and all Senators and House Members to agree to a 5% pay cut. Furthermore, I would request that all government employees making over $100,000 agree to a 5% reduction in pay.

      • sweatyb

        Only a socialist would voluntarily agree to a pay cut.

      • ottovbvs

        “I would request that all government employees making over $100,000 agree to a 5% reduction in pay.”

        Do you know what the cost of living is in Washington?

    • medinnus

      “Sir, the people are unhappy – they’re demanding a shorter workday!”

      “Fine – we’ll start by reducing their lunch hour to 20 minutes”

      – Groucho Marx

    • Andrew Pavelyev

      To begin with, cutting congressional salaries would save only a riduculously small amount of money (their total pay is on the order of $100 million).
      More importantly, a serious (rather than symbolic) cut would be highly undemocratic and effectively disqualify all but the wealthy from serving in Congress.

      • ottovbvs

        “would be highly undemocratic and effectively disqualify all but the wealthy from serving in Congress.”

        You don’t consider conflicts of interest a disqualifier?

  • AnBr

    On a side note, is there anyone here that does not think that paul_gs and sdspringy are not the same person? It is insane to allow users to change their display names at will on a political blog which tend to attract trolls. At least DSP has the good manners to ID himself on a name change and does not try to present himself as different people, but this policy is just asking for others to abuse it.

    • ottovbvs

      “At least DSP has the good manners to ID himself on a name change”

      I agree hat’s off to DSP and I’m not being snarky in this case.

    • zaybu

      It doesn’t matter what username they use, anyone can spot the goofy stuff.

    • TodaymynameisSDspringy

      I agree.

      • ottovbvs

        How’d he do that?

      • sdspringy

        Look I am stupid enough, and make the most idiotic comments without people confusing me with Paul-gs who is even stupider than I.

        Please, I realize that us wingnuts are intellectually challenged but stop making us look like fools. We can do that on our own behalf.

        • ottovbvs

          “We can do that on our own behalf.”

          ….this is not news.

        • paul_gs

          Springy, Not sure what you are talking about! I am not a wingnut I am a Canadian ay. I put my dumb opinions out there for all to see and laugh at.

        • magatha

          Canadians say “eh,” not “ay.”

  • nhthinker

    Payroll tax cut likely means an increase in the trade deficit- the growing trade deficit is the root to all economic evil.

    The tax cut is purely politics and moves us closer to a Grecian basket case economy.

    • ottovbvs

      “and moves us closer to a Grecian basket case economy.”

      Is this like the Grecian 2000 Economy?

      http://www.grecian-formula.com/

      It will do wonders for your thought processes and sex life thinker! Who knows maybe even Nancy Pelosi would fancy you. I know you have a class hatred against sailors but surely you’d love a month on a sailboat with Nancy.

      • nhthinker

        “I know you have a class hatred against sailors …”

        You are knowingly being dishonest. You, on frumforum, have referenced your yacht club and ivy-style.com and you have been pegged as a limousine liberal- So far, you have not denied it. Why is that?

        As to Nancy, or you for that matter, why would I want to spend a month on a sailboat with either of you two skinny and shriveled geriatric sisters that love collegiate wear?

        • ottovbvs

          “two skinny and shriveled geriatric sisters that love collegiate wear?”

          Oh my thinker….as well as hating sailors you also appear to hate senior citizens particularly those with a taste for preppy clothing.

        • nhthinker

          You are still not denying you are a limousine liberal.
          It was you that first used “old woman” as a slur this past week. Or are you too senile to remember?

        • ottovbvs

          “too senile to remember?”

          There you go again thinker sneering at the frailties of the old….what’s your problem with the aged?

        • nhthinker

          So you are admitting you made the “old woman” slur or admitting you are senile? Which is it? I promise to lay off you if you admit you may be forgetful and not responsible for knowing what you said earlier in the week when in comes to using “old woman” as a slur.

          Otherwise, if you were just being a hypocrite for using “old woman” in a pejorative sense and then admonishing me for using shriveled and geriatric to describe you and Nancy, then come out and say so. Or are you just parsing your elitist pejoratives, again?

    • TodaymynameisSDspringy

      The GOP is the anti tax cut party now. And the rubes like “thinker” will switch like turning the light on.

      What was right yesterday is suddenly wrong today. Oh the comedy!

      • nhthinker

        Todaymynameis…,
        Tomorrow your handle will be something else and we won’t give your littered opinion any consideration then, either.

        On the other hand, my opinions are consistent and always registered with the same handle. My assertion that addressing the continuous and growing trade deficit being critical to our economic health has been stated here for years.

    • ottovbvs

      “So you are admitting you made the “old woman”

      I know you’re startlingly dim at times thinker but I thought even you were familiar with what a metaphor is. Apparently not particularly since the tenor of your comments suggests this particular metaphor is particularly apposite in your case.

      • nhthinker

        Metaphors can be used in a pejorative sense- to attempt to associate a negative trait or image associated with the misogynist metaphor, in this case negative characteristics of “an old woman” on to a person of which the metaphor is applied.
        It is also a misogynist pejorative to claim someone is “acting like a little girl”, etc.

        Maybe they never taught you that in the Dark Ages. The tone-deafness is a part of your upbringing. Just because your idea of gratuitous misogyny was formed before 60s, doesn’t give you the privilege not to be called on it.

  • Ogemaniac

    “The only serious objection is that the extension would further increase the already huge budget deficit.”

    Wrong. This actually won’t affect the budget at all in the short term, as this money comes out of the SS trust fund. Of course, that means SS’s day of reckoning moves that much closer to the present, but it won’t affect the federal budget the way you think it will.

    Also, the real serious objection to this tax cut from the left, which is completely valid, is that this weakens SS and is obviously just a cheap gimmick to goose the economy a bit before the election.

  • bdtex

    The Republican objection to extending the payroll tax cut is simply picking a fight for the sake of fighting. Instead of picking their battles wisely,they’ve chosen to fight everything.

    “Opposition to the payroll tax cut extension is not only bad politics but also bad policy.” Score!

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