Every economist that I have seen quoted on the payroll-tax question has concluded that if the tax cut is not extended, it will reduce economic growth next year and cost hundreds of thousands if not millions of jobs.
A new poll by United Technologies/National Journal reports that an overwhelming number of Americans also support the tax-cut extension. According to the results, 58 percent of Americans support extending the cut another year, while 32 percent oppose its extension. As the National Journal concludes:
Support for extending the payroll-tax cut—despite concerns about the budget deficit—is broad and bipartisan. Democrats favor an extension, 68 percent to 25 percent. Half of Republicans think Congress should extend the payroll-tax reduction, while 39 percent think they should not. Among independents, 57 percent favor an extension, while a third do not.
And yet congressional Republicans are balking, having finally found a tax they do not want to cut. Apparently, tax cuts that would primarily benefit the working and middle classes are somehow different.
In the Senate, a majority of Republicans voted against their own party’s tax-cut plan last week, which would have been funded in part by cuts to food stamps and unemployment benefits. In the House, the Republican caucus is also rebelling. After a private caucus meeting, Rep. Jeff Flake of Arizona told Bloomberg that “many Republican lawmakers during the caucus meeting cautioned Boehner against pushing a proposal to the House floor. ‘Most of the people standing up were troubled with moving ahead on this,’ Flake told reporters.”
The Hill reports likewise, concluding that Boehner “is trying to rally support for a payroll tax extension that is paid for. But many in his House GOP conference doesn’t want to extend the tax cut into 2013, paid for or not.” The rejection by Senate Republicans is “a very ominous sign for Boehner, who is expected to release his legislative tax holiday plan this week. The speaker knows he will have to sweeten the pot if he is to woo conservative votes, especially in the wake of a contentious meeting of House Republicans last week.”
President Obama, recognizing political opportunity when he sees it, hasn’t been coy about pointing out the hypocrisy. Visitors to the White House website, for example, are greeted by a clock clicking off the deadline to act:
“Now, I know many Republicans have sworn an oath never to raise taxes as long as they live. How can it be that the only time there’s a catch is when it comes to raising taxes on middle class families? How can you fight tooth and nail to protect high-end tax breaks for the wealthiest Americans and yet barely lift a finger to prevent taxes going up for 160 million Americans who really need the help? It doesn’t make sense.
“Now, the good news is I think the American people’s voices are starting to get through in this time. I know that last week Speaker Boehner said this tax cut helps the economy because it allows every working American to keep more of their money. I know that over the weekend Senate Republican leaders said we shouldn’t raise taxing on working people going into next year. I couldn’t agree more, and I hope that the rest of their Republican colleagues come around and join Democrats to pass these tax cuts and put money back into the pockets of working Americans.
“Now, some Republicans who have pushed back against the idea of extending this payroll tax cut have said, ‘We’ve got to pay for these tax cuts.’ I’d just point out that they haven’t always felt that way. Over the last decade they didn’t feel the need to pay for massive tax cuts for the wealthiest Americans, which is one of the reasons we face such large deficits.
“Indeed, when the Republicans took over the House at the beginning of this year, they explicitly changed the rules to say that tax cuts don’t have to be paid for. So forgive me a little bit of confusion when I hear folks insisting on tax cuts being paid for.”
It should be stressed that this is just a temporary tax cut, designed to help get us through a tough time. It is not a permanent tax cut that would permanently reduce government revenue, and thus increase the deficit and debt. To many Americans, that’s a good thing, but its temporary nature is one of the main Republican complaints about it.
As conservative icon Milton Friedman explained back in 2003, the conservatives’ real interest in tax cuts is not economic; it is to deprive government of revenue needed to support programs such as Medicare and Social Security. Therefore, “Permanent tax cuts are much to be preferred to temporary cuts” because “they are a stronger restraint on spending and do not need to be repeated.”
– Jay Bookman