(White House)
Jackie Calmes of the
New York Times explores what is
expected to be the single biggest element of President Obama's jobs proposal tomorrow night:
The centerpiece of the job creation package that President Obama plans to announce on Thursday — payroll tax relief for workers and perhaps their employers — is neither his first policy choice nor that of many economists. But it is the one that they figure has the best chance of getting Republicans’ support.
I don't know what Calmes' sources are, but that seems like a fair assessment of what the White House is thinking. Remember, the payroll tax cut wasn't part of the original stimulus plan—it didn't come up as a serious possibility until after Republicans won control of the House in the 2010 midterms, and its main virtue was that it was a stimulus measure that Republicans could support.
But while the pragmatic argument for the payroll tax cut had some merit during last year's lame duck Congress, this year Republicans have all but ruled out a clean extension of the payroll tax cut. According to Calmes, the White House sees political upside in this turn of events.
And if Republicans oppose him, the White House figures Mr. Obama has the better of the political argument because he will be trying to block a tax increase that otherwise would apply to virtually all households on Jan. 1.
Indeed, President Obama hammered Republicans on this very point during his Labor Day speech, slamming them for opposing a tax cut designed to help working families. That would seem to put Republicans in a tough spot, but Calmes a scenario that could easily allow Republicans to turn the tables, trapping the White House:
Republican leaders have said they might support the payroll tax cut’s extension if its cost is offset by equal spending cuts, a condition they did not apply for extending the Bush-era tax cuts on high incomes. Mr. Obama has said he will propose long-term deficit savings to offset the short-term costs of his stimulus proposals, though that is not likely to satisfy Republicans.
You can see where this takes us: either (a) Republicans blame the tax cut expiration on President Obama's unwillingness to cut spending while he accuses them of hypocrisy or (b) President Obama agrees to the spending cuts in order to score a policy win (except for the part where we'd end up with no net stimulus).
Unless President Obama is prepared to say we can't cut spending any more than we already have, he's going to be in a tough spot to reject the GOP demands. If he were to accept them, however, the results would be disastrous.
On a political level, he'd be compromising in order to win support for a policy proposal that was intended to be a compromise in the first place, and on a substantive level, we'd end up without any net stimulus while simultaneously undercutting Social Security's funding mechanism. And to top it all off, we'd get to go through the spectacle of another round of deficit cutting on top of the Super Congress.
In the current political environment, Republicans are not going to agree to do anything that doesn't help them win the White House in 2012. Given that state of affairs, the pragmatic thing to do is to recognize the situation for what it is. And that means President Obama should build his jobs proposal around what he thinks are the very best ideas to actually grow the economy—not what his advisers think are the most "pragmatic" ones.