The debate in Washington about extending the payroll tax holiday has been remarkable. It has managed to put Republicans and Democrats alike in opposition to things they support, and in support of things they oppose. All at little actual benefit to them — or the rest of us.
OK, let’s make that “remarkably bad.”
Here are the basic facts: Last December, as part of a broader deal, the president and the Congress agreed to a one-year reduction of 2 percentage points in employees’ portion of payroll taxes, which are supposed to fund Social Security and Medicare. Leaders of both parties propose extending the holiday through next year. Both have tacked onto their proposal an unrelated extension of unemployment benefits. They have competing plans to offset the extension, which is projected to reduce revenues by $120 billion.
After that, there’s little agreement about anything.
Republicans don’t share President Obama’s obsession with raising taxes on “millionaires and billionaires” (no matter what the problem is, he says taxing “the rich” is part of the answer). Thus, he charged last week, the GOP will “barely lift a finger to prevent taxes going up for 160 million Americans who really need the help.”
And what qualifies as “barely lift[ing] a finger”? Why, proposing to do exactly what was done last year and exactly what Senate Democrats now propose, but with different offsets.
When Obama finally acknowledged Senate Republicans had proposed extending the tax holiday, he said he wouldn’t agree to a plan whose offsets — spending cuts — “hurt the economy.” Which requires him to ignore the fact that the tax cuts come today but, as usual, the spending cuts don’t kick in until a few years have passed, if ever.
This is the standard pattern by which Washington kicks the can down the road, in another of the president’s favorite tsk-tsk phrases.
But what’s really odd is how the debate has put Republicans and Democrats in one another’s shoes. Suddenly, Democrats profess belief that tax cuts create jobs.
Meanwhile, it’s left to Republicans to argue that lowering the payroll tax will destabilize Social Security. You know, the program the GOP supposedly wants to gut, right before pushing your wheelchair-bound grandma off a cliff.
To their credit, there are some Democrats who recognize that cutting the link between payroll taxes and Social Security only further weakens the notion that working Americans pay for the benefits they eventually receive. In fact, working Americans pay for current retirees, with nothing but a promise from Congress that future generations will do likewise decades hence.
Similarly, there are principled Republicans willing to make the case, an unpopular one in this instance, that not all tax cuts are created equal. A temporary tax cut with unpredictable effects on demand for business owners will have far less economic impact than a tax cut that is long-term and produces clear incentives.
Yet, for the most part, this debate features Democrats acting to weaken a cornerstone of the New Deal, while Republicans thumb their noses at a key underpinning of supply-side economics.
A lack of bipartisanship sets hands a-wringing, but at least partisan gridlock usually has the benefit of contrasting coherent, divergent philosophies. Voters then face a clear distinction and can opt for whichever viewpoint seems to fit the nation’s contemporary problems best.
I find it much more worrying for the parties to forsake those coherent, divergent philosophies in favor of political pandering.
That’s hardly an unprecedented occurrence, and the parties still will present stark contrasts next year in their visions for the size, scope and role of the federal government, as Obama observed in an interview broadcast Sunday on “60 Minutes.”
Yet, few contemporary problems are more pressing, more in need of clear choices for voters to evaluate, than the big three federal expenses of Social Security, Medicare and Medicaid, and how we pay for them. Fail to offer that choice, and it’ll cost the average person a lot more than $20 a week in his paycheck.
– By Kyle Wingfield