Tea party Republicans are going to need a
new slogan if they fight for higher taxes in 2012
(Michael Rubin/Dreamstime)
Despite Republican
opposition, Democrats are
launching a push to continue last December's payroll tax cut through 2012.
The campaign will involve a wide range of party assets -- from lawmakers to new media operatives -- and take place in a number of states, including New Mexico, Colorado, Arizona, Iowa, Virginia, Pennsylvania, Florida, Nevada, New Hampshire, North Carolina, California, Minnesota, Wisconsin, South Carolina and Missouri.
According to a DNC official, members of Congress will be holding coordinated press conferences this week alongside allied groups and other elected officials. There will also be what the official described as a strong social media component involving Facebook campaigns and Twitter posts from members of Congress and the DNC -- all toward the general effort of "hammering the hypocrisy of individual members who signed [Grover] Norquist's pledge [not to raise taxes]."
The payroll tax cut reduces Social Security taxes by two percentage points for all Federal taxpayers, but it is currently slated to expire at the end of 2011. Along with last December's extension of unemployment benefit by the lame duck Congress, it's the only stimulus measure that Congress has passed since the November elections.
Extending the tax cut another year would cost $120 billion. The upside is obvious: the economy is in bad shape, and ending the temporary payroll tax cut at the end of the year would reduce net demand by $120 billion when we can least afford it. Moreover, with interest rates on federal borrowing at historical lows, it's more important to get as much stimulus as we can than to worry about debt.
The downside of extending the cuts is the possibility that they could erode the long-term funding mechanism of Social Security. That's a real risk, and if they are extended it's important to make sure that they are temporary, and don't become permanent. But beyond the payroll tax cuts and an unemployment benefit extension, it's hard to see much else actually getting through Congress, and at this point, I'd argue we shouldn't let potential long-term risks result in paralysis now.
That being said, it's not even clear if Republicans will end up supporting the extension. Last year, they held the entire tax code hostage to win a two-year extension of Bush's high-income tax cuts. This year, at least so far, they are objecting to a temporary one year extension of a tax cut that would go to every single Federal taxpayer, rich and poor alike.
While I can understand why some progressives might not support extending the payroll tax cut (because it could threaten Social Security's long-term funding mechanism), I can't think of a single ideologically consistent reason why Republicans would be willing to oppose it. Even if they think that wealthy folks are the job creators, and the tax code should benefit them, the fact is that everybody who pays payroll taxes would benefit from the payroll tax cut, and the people who pay the most in payroll taxes would benefit the most.
The only reason I can think of that makes any sense is that Republicans think blocking the payroll tax extension will hurt the economy, and that they believe hurting the economy will help them win the presidency in 2012. And as Mitch McConnell said, nothing is more important to them than reclaiming the White House in 2012. Not even the strength of the American economy.