The stupid payroll-tax fight isn’t going to benefit anyone
No one is completely in the right in the Washington-wide temper tantrum over extending the payroll-tax holiday. I don’t understand how Senate Republicans — who voted in large numbers for a two-month extension of the holiday — could have been so far out of step with House Republicans who insist on the year-long extension they’ve already passed.
That said, I have a hard time understanding the sudden conventional wisdom that public opinion about the situation will favor:
a) Senate Democrats, who want to enact a two-month extension offset by a tax on middle-class mortgagees and then spend even more time early next year arguing about the very same issue rather than moving on to other issues — rather than enacting a one-year extension offset by the exact same tax on middle-class mortgagees as well as a reduction in welfare and entitlement benefits for wealthy Americans and illegal immigrants, a pay freeze for federal workers, the auctioning of some wireless spectrum, and a few smaller items;
and/or
b) President Obama, who has repeatedly said he wants a full-year extension of the payroll-tax holiday but who, rather than castigating the Senate for passing only a two-month extension, instead is being nakedly partisan in castigating the House for sticking to its year-long extension.
Other than the length of the extension, there is very little substantive difference between the two bills except for the offsets, which is natural given that a year-long extension requires more offsets than a two-month extension. And there is very little in the House’s list of offsets that could be considered widely controversial.
And then there’s the fact that neutral experts say a two-month extension would be a nightmare for smaller firms to implement.
We’re long since past debating the actual merits of extending the tax holiday. As I said at the outset, no one in this kerfuffle comes out looking good. But does it really make sense to believe that the group that passed a short-term, unworkable bill, and the president who supported that about-face, are going to benefit from it, at the expense of the group that passed the longer-term, more practical bill? Obama and the Democrats made that bet during the debt-ceiling debate last summer. Instead, all they did was see their public approval sink alongside that of the Republicans.
I think most Americans will join me in asking that the same, big, fat lump of coal be dumped in all their stockings.
– By Kyle Wingfield
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234 comments Add your comment
Tiberius - Your lightning rod of hate!
December 21st, 2011
8:53 am
commoncents said it best.
Let’s try a payroll tax cut to boost the economy, and let’s make it temporary to see if it works.
It didn’t work? Well, let’s do it again!
Only in the minds of this current Administration would logic like that seem plausible.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
8:58 am
Sbinf: Republicans loved the tea party when it helped them retake the house, but now they actually have to govern with them. I am loving this train wreck!
————————-
Real change isn’t easy or pretty. The kind of change Obozo promised (more spending, bigger handounts, less personal responsibility, blaming others) is the easiest thing in the world.
The train wreck you are going to get isn’t the one you’re hoping for.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:02 am
The House conferees are in DC waiting for the reconciliation talks to start. Where are the Democrats?
JDW
December 21st, 2011
9:08 am
@Kyle…”I have a hard time understanding the sudden conventional wisdom that public opinion about the situation will favor…Senate Democrats, who want to enact a two-month extension offset by a tax on middle-class mortgagees…President Obama, who has repeatedly said he wants a full-year extension of the payroll-tax holiday”
Kyle, Kyle, Kyle you are a smart guy I am sure you get it, but feel compelled to carry this muddy Republican water for some reason.
The Senate Democrats yet again have capitulated to the Republican filibuster machine. You are right it is not a very good deal however, the Senate Democrats have held their nose and turned up their rears and made a deal. I wish they would grow a backbone tell the Republicans to pound salt at this point. However, they come out of this smelling better because they did something, at least on paper in a “bipartisan fashion” to give people a tax cut.
Obama, smells better because he now has the opportunity to tout the very same concept…hey look we want a better deal but at the end of the day we have to work with the Republicans..we did just what they wanted and now they want more?
Boehner has lost control. If he had a shred of self respect he would resign. His own caucus roasted him on the debt ceiling fiasco and now they have left him out dry. Fact is he can’t get anything done.
The Republicans had a marvelous negotiating run this year and have gotten almost everything on their wish list but what they have failed to understand is that if you get almost everything but continue to push for more you will ultimately lose it all.
Streetracer
December 21st, 2011
9:09 am
For some of the factually challanged up there:
The house passed a bill that did pretty much what Obama said he wanted. That is an one year extension of the payroll tax reduction (which was paid for with what seems to me reasonable spending cuts [for example, why should 2000+ millionares receive unemployment benefits]). The only sticking point was the Keystone XL pipeline. That project would actually provide truely “shovel ready” jobs at no cost to the US Government (paid for by the owner, Trans-Canada).
On the other hand, the Senate passed a bill that would create an accounting and processing nightmare (because of the short duration), and is “paid for” by a permanent fee on any mortgage guaranteed by Fannie Mae or Freedie Mac. BTW: That mortgage fee does not go to Social Security or Medicare, but to the General Fund, and is regressive in nature.
Explain to me why the House is the bad guy here.
JDW
December 21st, 2011
9:10 am
@LBB…”The House conferees are in DC waiting for the reconciliation talks”
First off there are no conferees. Second if they are waiting for the reconciliation talks they are just flat stupid.
td
December 21st, 2011
9:10 am
All you libs seem to forget a few facts:
This is not a tax cut but rather a reduction in an insurance premium. We pay these premiums each month so that we can have a pay out when we reach retirement. We pay taxes to run the government today and we pay these premiums for the future.
These are the facts and what we are doing now is nothing more than wanting our future benefits now (sort of like what we did with taking out equity loans to pay for vacations and new cars a few years ago) and not thinking about the future. We are going to make our children and grand children pay more in the future to pay for our greed today. Are all you libs and establishment Republicans proud of your choices for give me, me, me now, now, now?
gm
December 21st, 2011
9:11 am
Joe The Plumber too.
Thats the differents between tre Americans and selfish Americans, my family and I are doing fine, but I care about the millions out there who umemployment check will run because they can not find work, I rather have a person from another country living next to me then a selfish un American like yourself and your kind.
The ladder you came up on you will have to come down on, you are on the plantation becaue you and your party do not have morales and values (newt) and this is part whats brining this country down, thank God we have passionate President who cares about the under dog”””
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:13 am
JDW: However, [Democrats] out of this smelling better because they did something
———————————
Given the corrupt state of the Obozomedia, you may not be aware that the GOP House “did something” too…they passed the year-long tax holiday Obozo wanted and paid for it.
Now the House conferees are waiting for the Senate Democrats to negotiate a final bill, but they seem to have skipped town before finishing the job the people pay them to do.
JDW
December 21st, 2011
9:14 am
@TD…”We are going to make our children and grand children pay more in the future to pay for our greed today”
No question but where are you with this sentiment when the Republicans are tossing away Trillions of dollars on unfunded tax cuts, Medicare Plans and wars? I am sure you were one of the first in line to shout hurrah when the Bush tax giveaway was extended.
GTPHISH
December 21st, 2011
9:15 am
Lil’ Barry Bailout (Revised Downward)
Dude, your name is clever, but, lets not forget, Bush bailed out the banks, so perhaps you should (revise downward your own stupid name)….
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:16 am
JDW: First off there are no conferees.
——————
Boehner names conferees for payroll tax bill
http://thehill.com/blogs/on-the-money/domestic-taxes/200589-boehner-names-conferees-for-payroll-tax-bill
Oopsies!
JDW
December 21st, 2011
9:16 am
LBB…you are truly one of the 1%…you never get it and never will. Risk any more lives in traffic today proving you are indeed the biggest A$$?
JDW
December 21st, 2011
9:17 am
@LBB…”Boehner names conferees for payroll tax bill”
Did you ever notice that it takes TWO parties to actually pass anything? Boehner is just playing in his pockets.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:20 am
JDW, I don’t blame you for your embarrassment over getting caught without the facts.
Yes, it takes two parties to pass anything. And guess what’s supposed to happen when the two chambers pass differing bills?
That’s right–the two parties meet in conference to hammer out a COMPROMISE.
Unfortunately, the GOP doesn’t have anyone to comprimise with, because the Democrat Senate skipped town before doing the work the people pay them for.
GTPHISH
December 21st, 2011
9:20 am
LBB, ever heard of TARP? Probably not, for a fat girl, you sure don’t sweat much….
“The TARP program was created in 2008 to stabilize the financial system. The Treasury Department has committed more than $500 billion to more than 800 firms through the program. While Mr. Obama did not enact TARP, his administration has largely been responsible for administering it.”
http://www.cbsnews.com/8301-503544_162-20013452-503544.html
td
December 21st, 2011
9:21 am
JDW
December 21st, 2011
9:14 am
I was on these boards railing against Medicare part D everyday. We disagree about the Bush (now Obama) tax cuts because it has been proven that tax cuts bring in more revenue not less.
As far as unfunded wars, I will agree but for probably different reasons. Funding wars are one of the few duties of the Federal government and they should have been on the books. We should have paid for them by reducing the federal government and not by raising taxes.
Joe The Plumber too.
December 21st, 2011
9:25 am
poor little gm, if you want to live next to a person from another country, perhaps I could interest you in one of my rentals as they come available, but I will need first, last and deposit and I don’t do section 8 or accept ebt. Let me know if you need an application. Bless your heart.
td
December 21st, 2011
9:25 am
GTPHISH
December 21st, 2011
9:20 am
Yes, Obama voted for TARP and his administration was responsible for most of the regulations that implemented TARP and administered the entire program.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:27 am
GTPHISH: LBB, ever heard of TARP?
———————–
Yes, our President Bush got that passed, fixing the financial meltdown, and the recession ended in June 2009. Yawn.
The real story is how Obozo has so mismanaged the economy since then. 9% unemployment for years, $1.5 trillion annual deficits, record numbers in poverty and on food stamps.
Obozo: Fail.
JDW
December 21st, 2011
9:27 am
@TD…”because it has been proven that tax cuts bring in more revenue not less.”
You are working on false assumptions. What you see below are tax collections by year in constant 2005 dollars. Please note that beginning in 2001 tax revenues shrink each year until 2004. Then they rise until 2007 and start down again. Following the Bush giveaway program there have been only two years in which tax revenues equaled or exceeded those in 2000…that’s less not more.
2000 2,310.0
2001 2,215.3
2002 2,028.6
2003 1,901.1
2004 1,949.5
2005 2,153.6
2006 2,324.1
2007 2,414.0
2008 2,286.8
2009 1,898.3
2010 1,919.0
Estimates
2011 1,901.9
2012 2,261.5
2013 2,541.3
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:30 am
So the tax cuts were fully implemented in 2003, and then tax revenue went up in each of the next four years. Thanks for the confirmation.
Perhaps we should have cut taxes again in 2007.
HDB
December 21st, 2011
9:31 am
td
December 21st, 2011
9:21 am
EVERY war effort this nation has undertaken save Bush’s Iraq and Afghanistan expeditions was financed via tax INCREASES!! There was no way to properly finance the war AND provide the required governmental services by taking the war spending off the books!! During wartime, this nation has been asked to sacrifice….but Bush didn’t do that…..and we’re paying for it NOW!!
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:33 am
HDB: we’re paying for it NOW!!
———————
Actually, we aren’t. Obozo’s deficit this year is another $1.3 trillion.
JDW
December 21st, 2011
9:35 am
@TD…and while I am on the subject of tax cuts.
A) As we have just seen they do not produce more revenue.
B) They don’t produce jobs either.
What produces jobs is demand. A business hires each and every one of their employees because they expect to make more than they spend. They will never ever make a hiring decision if they believe they will make less than they spend. In all of the hiring decisions I have made and seen made over the years, both individually and organizationally, I have never ever heard the subject of taxes come up. In fact operationally businesses measure results on some version of Earnings BEFORE Taxes for that very reason.
So a tax cut can indirectly increase the market for jobs if and only if it raises demand. To accomplish that it must be spent. That’s a prime reason this tax cuts for job producer’s line is pure hogwash. Those tax cuts do almost nothing to impact the job market because that money is typically not spent.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:37 am
Unemployment went down after our President Bush cut taxes in 2003.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:40 am
In all of the hiring decisions I have made and seen made over the years, both individually and organizationally, I have never ever heard the subject of taxes come up.
———————–
Every ROI calc I’ve ever seen most certainly does take tax rates into account. Higher tax rates result in fewer new companies, fewer big investments, and fewer jobs.
jconservative
December 21st, 2011
9:40 am
“I don’t understand how Senate Republicans — who voted in large numbers for a two-month extension of the holiday — could have been so far out of step with House Republicans who insist on the year-long extension they’ve already passed.”
Senate Republicans say that Boehner endorsed the Senate Republican compromise of 2 months, then had an about face after the House Republican Caucus objected.
The Republican problem in congress all year has been Boehner’s inability to control his own caucus.
The Senate Republicans have made deals with Boehner all year only to have Boehner back out at the last second. He really folds rather quickly.
Bottom line politically is that 156 million people who pay FICA will see a 2% tax increase 1/1/12.
So we can expect that no later than the end of January a 12 month extension of the payroll tax back dated to 1/1/12. Republicans are not going into the 2012 election bragging on raising taxes by 2% on 156 million voters.
At least I do not think they will.
What???
December 21st, 2011
9:42 am
Enter your comments here
What???
December 21st, 2011
9:44 am
LBB-
So the tax cuts were fully implemented in 2003, and then tax revenue went up in each of the next four years.
But they didn’t past the 2000 number until 2006…so you waited 6 years to get back to 2000 revenue.. How is that smart. Would you let me cut your pay now and tell you in 6 years you will make 1% more than you made in 2012?
clyde
December 21st, 2011
9:45 am
I don’t know what the Republicans hope to gain by this.I’ll have to wait and see.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:47 am
What???: But they didn’t past the 2000 number until 2006
———————————
If the tax rates between 2000 and 2003 were so great, why did revenue go down? Because the economy slowed after Clinton’s dot-com bust and 9/11. Our President Bush wisely cut tax rates to get the economy growing again, and it worked.
Lower tax rates. Higher tax revenue. Lower unemployment.
Thank you, President Bush. Unfortunately, we’ve forgotten the lessons You and our President Reagan taught us.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:48 am
clyde: I don’t know what the Republicans hope to gain by this.
————————
Fiscal sanity.
Oh, you meant politically, eh?
JDW
December 21st, 2011
9:49 am
@LBB..”Higher tax rates result in fewer new companies, fewer big investments, and fewer jobs.”
There is no data on “big investments” but the data on new company creation and jobs does not produce such a correlation. In fact in many cases the data seems to indicate exactly the opposite. When do you think more jobs and companies were created…1992 to 2000 or 2000 to 2008?
What???
December 21st, 2011
9:51 am
1 He cut taxes when he came into office so couldn’t the loss in revenue be attirbuted to those same cuts. .
2. If you are attributing unemployment solely to taxes, then why did Clinton have lower unemployment than Bush throughout his presidency.
3. On that same note, then the actual rate of taxation would have litle to do with anything because Reagan produced jobs at a 50% tax rate(didn’t reach 28% until 2nd term), And jobs were produced at higher rates prior to Bush
4. On a micro level, would you let me lower your pay now for a bump 6 years from now?
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:52 am
Let’s see, were more jobs created during the growth of the dot-com bubble, or after it burst?
A real mystery.
Our President Bush had some big messes to clean up after 2000. A war on terror that his predecessor didn’t realize was being waged against us, and an imploding economy after the Internet-induced irrational exuberance.
jconservative
December 21st, 2011
9:53 am
“Unemployment went down after our President Bush cut taxes in 2003.”
And Net Jobs Created went down from 20% to 0% (yes zero) after Bush cut taxes.
In fact, Net Jobs Created went down from 27% to 20% after Reagan cut taxes.
So after huge tax cuts for 30 years Net Jobs Created has gone from 27% to 0%.
The number of jobs created minus the number of jobs lost is at zero per cent. A 30 year trend.
Yet we have been cutting taxes for 30 years. Another trend.
Of course, we can make the Obama argument that if we had not cut taxes then it would have been worse. Maybe. Maybe not.
What do you call it when you do the same thing over and over and expect a different result?
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:56 am
In any case, this is all water under the bridge.
The question is how to deal with today’s reality. Apparently, Obozo’s plan is to spend our way out of it, impose lots of new expensive regulations, and create tons of uncertainty about future tax rates. Sounds like a winner!
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
9:57 am
jconservative: What do you call it when you do the same thing over and over and expect a different result?
—————————
There are two million fewer jobs today than when Obozo took office. What he’s doing is failing.
We need change.
What???
December 21st, 2011
9:58 am
LBB-
create tons of uncertainty about future tax rates
What uncertainity, it’s either 35 or 39 at the top. I’m a lot more uncertain about consumer demand than I am about my tax rate. And the last study I saw, the regulations between this administration and the prior administration were about the same i believe..
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
10:03 am
What uncertainity
——————–
The more important bit of uncertainty is regarding capital gains rates, which are currently at 15% but would increase by a third, to 20%, if I’m not mistaken. This will reduce investment and cost jobs.
JDW
December 21st, 2011
10:06 am
@LBB..”In any case, this is all water under the bridge.”
Indeed, which I assume is your way of saying you got nothing let. Now as to what to do next. As jconservative points out we have established a 30 year trend. Why on earth should we elect more people that plan to do the same thing that has failed over and over again?
What???
December 21st, 2011
10:07 am
LBB-
So now we are just worried about capital gains rates..ok, well lets keep those permanent and move the marginal rates back to the 2000 era(not even gonna begin to see what the capital gains rates was in 2000, seems to me if we had a stock bubble, they probably don’t matter as much).
JDW
December 21st, 2011
10:09 am
“This will reduce investment and cost jobs.”
HORSE HOOEY! We have already been through the jobs bit no impact. As for reduced investment…get back to me when the investors are fully invested then and only then will taxes have an impact on investments.
carlosgvv
December 21st, 2011
10:09 am
And yet, come election day, millions and millions of Americans will vote for these clowns and probably re-elect them.
What???
December 21st, 2011
10:10 am
LBB-
Nevermind, it was quick to lookup, they were 10 and 20%..so we had a bubble at 10 and 20%, low unemployment, and pretty good investment….so obviously the cap gains rate didn’t really suppress anything.
Lil' Barry Bailout (Revised Downward)
December 21st, 2011
10:22 am
I’d be fine with the 2000 tax rates so long as we go back to the 2000 spending rates.
MarkV
December 21st, 2011
10:26 am
Seldom I have seen Kyle to be as wrong in the heading of his article as this time. He would have to be blind not to see that the “stupid payroll-tax fight” is benefiting Obama and the Congress Democrats.
MarkV
December 21st, 2011
10:27 am
Tiberius – Your lightning rod of hate! @8:53 am “Let’s try a payroll tax cut to boost the economy, and let’s make it temporary to see if it works. It didn’t work? Well, let’s do it again! Only in the minds of this current Administration would logic like that seem plausible.”
The recent good economic news must be a nightmare for you.
gm
December 21st, 2011
10:30 am
Wow, Kyle tell that to the millions of Rep and Dem who unemployment checks will not be extended while they are looking for work, I am sure extra 16 weeks makes a different when buying food.
This is what rep conservatives do, put a spin on people lifes , Kyle you try to live off of 320 week, this bill is more then payroll tax, rep and dem in the Senate voted for this, this is the same spin rich idiots like hannity and rush uses to expolit middle class conservatives and they fall for it every time.