Too many in the media ignore the real issue in the debate on extension of the payroll tax cut, which also includes an extension of unemployment insurance and the Medicare Doc Fix, which will keep Medicare payments from going down 27%. The question is not whether the bill should pass. The question is how to pay for it. The Democrats want to pay for it with a tax on the wealthy, the Republicans don't. They want to pay for it with budget cuts aimed at Federal employees, the middle class and the poor.
It should be noted that that while the Republicans are now supporting the payroll tax cut and UI extension, they have adopted those positions out of political expediency. They really don't want either one but have come to the realization that opposition at this time is a non-starter for these popular proposals.
The reason why the Senate was able to pass a two month extension was because it costs relatively little and could be paid for with some new fees on people taking out mortgages. That would not work for a full twelve month extension. A twelve month extension will require some taxes on the wealthy or, if the Republicans get their way, more middle class budget cuts.
It is important to remember this because in the past Republicans have successfully jammed the Democrats on how to pay for programs the Democrats want and know the country needs. We have to stand firm this time. We cannot give in to the Republican pressure even if it means there may be a period of time when UI is not extended and a few paychecks go out without the payroll tax cut. Yes that will be hard on individuals. But only when the effect of this Republican intransigence is felt will we get the groundswell that is needed to make the Republicans understand that they have to accept some increased taxes on the wealthy.
This issue is not going away. It will come up next year even if there is a two month extension. It will come up when the 2013 budget is considered next year. And it will come up at the end of next year with the expiration of the Bush tax cuts. Democrats must be willing to do what is necessary to restore some tax equity and progressivity in our tax structure. The public is on our side. We just need to stand firm.
Note. I did not mention the other option, which is to not pay for it. That is an option but not one the President or Democrats should suggest. Let the Republicans do it. But even if this is not paid for the question about raising taxes is still with us. We do not have enough revenue. The Bush tax cuts cannot be extended indefinitely.