GOP's Payroll Tax Fiasco

[General Mung Beans]

http://online.wsj.com/article/SB1000142 ... 64702.html

GOP Senate leader Mitch McConnell famously said a year ago that his main task in the 112th Congress was to make sure that President Obama would not be re-elected. Given how he and House Speaker John Boehner have handled the payroll tax debate, we wonder if they might end up re-electing the President before the 2012 campaign even begins in earnest.

The GOP leaders have somehow managed the remarkable feat of being blamed for opposing a one-year extension of a tax holiday that they are surely going to pass. This is no easy double play.

Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter, although he's spent most of his Presidency promoting tax increases and he would hit the economy with one of the largest tax increases ever in 2013. This should be impossible.

House Republicans yesterday voted down the Senate's two-month extension of the two-percentage-point payroll tax holiday to 4.2% from 6.2%. They say the short extension makes no economic sense, but then neither does a one-year extension. No employer is going to hire a worker based on such a small and temporary decrease in employment costs, as this year's tax holiday has demonstrated. The entire exercise is political, but Republicans have thoroughly botched the politics.

Their first mistake was adopting the President's language that he is proposing a tax cut rather than calling it a temporary tax holiday. People will understand the difference—and discount the benefit.

Republicans also failed to put together a unified House and Senate strategy. The House passed a one-year extension last week that included spending cuts to offset the $120 billion or so in lost revenue, such as a one-year freeze on raises for federal employees. Then Mr. McConnell agreed with Senate Majority Leader Harry Reid on the two-month extension financed by higher fees on Fannie Mae and Freddie Mac (meaning on mortgage borrowers), among other things. It passed with 89 votes and all but seven Republicans.

Senate Republicans say Mr. Boehner had signed off on the two-month extension, but House Members revolted over the weekend and so the Speaker flipped within 24 hours. Mr. Boehner is now demanding that Mr. Reid name conferees for a House-Senate conference on the payroll tax bills. But Mr. Reid and the White House are having too much fun blaming Republicans for "raising taxes on the middle class" as of January 1. Don't be surprised if they stretch this out to the State of the Union, when Mr. Obama will have a national audience to capture the tax issue.

If Republicans didn't want to extend the payroll tax cut on the merits, then they should have put together a strategy and the arguments for defeating it and explained why.

But if they knew they would eventually pass it, as most of them surely believed, then they had one of two choices. Either pass it quickly and at least take some political credit for it.

Or agree on a strategy to get something in return for passing it, which would mean focusing on a couple of popular policies that would put Mr. Obama and Democrats on the political spot. They finally did that last week by attaching a provision that requires Mr. Obama to make a decision on the Keystone XL pipeline within 60 days, and the President grumbled but has agreed to sign it.

But now Republicans are drowning out that victory in the sounds of their circular firing squad. Already four GOP Senators have rejected the House position, and the political rout will only get worse.

One reason for the revolt of House backbenchers is the accumulated frustration over a year of political disappointment. Their high point was the Paul Ryan budget in the spring that set the terms of debate and forced Mr. Obama to adopt at least the rhetoric of budget reform and spending cuts.
But then Messrs. Boehner and McConnell were gulled into going behind closed doors with the President, who dragged out negotiations and later emerged to sandbag them with his blame-the-GOP and soak-the-rich re-election strategy. Any difference between the parties on taxes and spending has been blurred in the interim.

After a year of the tea party House, Mr. Obama and Senate Democrats have had to make no major policy concessions beyond extending the Bush tax rates for two years. Mr. Obama is in a stronger re-election position today than he was a year ago, and the chances of Mr. McConnell becoming Majority Leader in 2013 are declining.
***

At this stage, Republicans would do best to cut their losses and find a way to extend the payroll holiday quickly. Then go home and return in January with a united House-Senate strategy that forces Democrats to make specific policy choices that highlight the differences between the parties on spending, taxes and regulation. Wisconsin freshman Senator Ron Johnson has been floating a useful agenda for such a strategy. The alternative is more chaotic retreat and the return of all-Democratic rule.

At the way things are going, Obama is going to have a Truman style strategy attacking the "Do-Nothing Congress" and Mitt Romney in many ways IMO resembles Thomas Dewey,.

[Eframepilot]

Let's hope so. Many political scientists believe that voters tend to vote based on the condition of the economy above all else, and they may punish Obama for the damage done by the Republicans' sabotage.

[JME2]

Let's hope so. Many political scientists believe that voters tend to vote based on the condition of the economy above all else, and they may punish Obama for the damage done by the Republicans' sabotage.

Yeah, that need to 'punish' played its role in the 2010 election and the fiasco we're currently in.

[Pelranius]

Has Boehner just forgotten how undisciplined Congresspeople mucked up the GOP back in the 1990s?

Or is he simply to spineless to control them?

[Flagg]

Has Boehner just forgotten how undisciplined Congresspeople mucked up the GOP back in the 1990s?

Or is he simply to spineless to control them?

He's just really bad at his job, is what it is.

[Simon_Jester]

...Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter, although he's spent most of his Presidency promoting tax increases and he would hit the economy with one of the largest tax increases ever in 2013. This should be impossible.

I love how the Wall Street Journal considers expiration of the Bush tax cuts to be "one of the largest tax increases ever." This was planned all along, boys and girls; Bush himself signed the tax cuts into law with an expiration date. The only reason this is suddenly "oh my god a TAX INCREASE" is because the Republican Party still hasn't grasped the idea that it passed those tax cuts over the deep misgivings of people worried about how to pay for the government, and still assumes that any time the Republicans don't have a majority is an unnatural abomination.

This isn't a tax increase. It's an intervention for a nation whose tax policy is three sheets to the wind.

House Republicans yesterday voted down the Senate's two-month extension of the two-percentage-point payroll tax holiday to 4.2% from 6.2%. They say the short extension makes no economic sense, but then neither does a one-year extension. No employer is going to hire a worker based on such a small and temporary decrease in employment costs, as this year's tax holiday has demonstrated. The entire exercise is political, but Republicans have thoroughly botched the politics.

This, too, is the Wall Street Journal entirely missing the point. Ultimately it is not about jobs- a 2% drop in payroll taxes isn't going to be decisive for employers no matter how permanent it is. It's about providing a tax cut for people who make money by working at jobs, and who are very short of money even without the risk of being out of a job.

Senate Republicans say Mr. Boehner had signed off on the two-month extension, but House Members revolted over the weekend and so the Speaker flipped within 24 hours. Mr. Boehner is now demanding that Mr. Reid name conferees for a House-Senate conference on the payroll tax bills. But Mr. Reid and the White House are having too much fun blaming Republicans for "raising taxes on the middle class" as of January 1. Don't be surprised if they stretch this out to the State of the Union, when Mr. Obama will have a national audience to capture the tax issue.

If Republicans didn't want to extend the payroll tax cut on the merits, then they should have put together a strategy and the arguments for defeating it and explained why...

But now Republicans are drowning out that victory in the sounds of their circular firing squad. Already four GOP Senators have rejected the House position, and the political rout will only get worse.

This is inevitable- the Republican party is becoming steadily more fractious and unwilling to compromise because their election strategy in secure red states is "mobilize the base," while making the base ever more convinced that the country will implode unless we use the most ultra-conservative policies possible. That works, but it gives individual Republican politicians a lot more incentive to listen to the people who voted them into office, who will not accept compromise with the tax-and-spend liberal Obamacrats, even when the compromise would give the Republicans most of what they want that is consistent with having a two-party system with checks and balances.

That hurts Republican party discipline, which was one of the great advantages the party enjoyed in Congress since 1994.

[Pelranius]

I wonder how plausible it would be for someone in the GOP House hierarchy to launch a coup against Boehner, given his obvious incompetence?

[Zed]

It's exactly the risk of a coup that caused Boehner to act like he did. If he did differently, he'd have probably faced a challenge from the Tea Party.

[Pelranius]

It's exactly the risk of a coup that caused Boehner to act like he did. If he did differently, he'd have probably faced a challenge from the Tea Party.

But if they have that much influence, they might as well cut out the middle man and bring in someone more charismatic to the Speaker's post.

[Simon_Jester]

No, this is common in coalition governments- a minority party holding 20-30% of the seats in the legislature may have enough influence to manipulate the leader of the coalition, without being able to run things themselves.

If the House leadership were all-Tea, Republican control of the house might actually collapse, because of the risk that Republicans with districts in blue or swing states could be driven into the arms of the Democrats. Many of the Tea Party policies are unpopular (or spinnable as unpopular) that the Tea Party representatives themselves would be in danger of losing the next election if those policies were passed by the House- let alone people whose electoral success hinges on not being that far to the right of the Democrats and not visibly opposing things like social security and the Department of Education.

I remember a case where a Tea Party budget was officially under consideration and Democrats started voting "abstain;" suddenly, half the Republican congressmen had to switch sides and vote against the budget for fear it would actually pass.

Besides which, even if the Tea Party owned the House, they'd have a much harder time getting any bills past the Senate and White House. A less extreme leadership in the House has a better chance of negotiating deals with Obama and Reid, which many Republicans in the House still consider necessary because they know a strategy of pure delay is likely to backfire.

...

Thinking about it, Mitch McConnell might have actually made a better House Majority Leader for the Republicans if he'd been in office back before 2006. What's giving him trouble is the division within his own party, because the platform that gets Republicans into office in some states won't work for them in others and vice versa. When the party was more unified and there was less need for whoever ran the Republicans to placate both the center-right and the far-right at the same time, the job was probably easier.

[Sea Skimmer]

Looks like the Republicans saw the writing on the wall and are going to vote on the two month deal. Not passed yet just yet though.

US Republicans agree to tax deal

The payroll tax dispute is the latest in a series of bitter congressional budget battles this year
US House of Representatives Speaker John Boehner has agreed to a vote on a bipartisan deal to extend a payroll tax cut.

House Republicans had refused to vote on the bill, passed by Republicans and Democrats in the Senate last Saturday.

Its passage would end a bitter standoff between President Barack Obama and Republicans.

The tax break was due to expire on 31 December, hitting the wage packets of some 160 million American workers.

The compromise deal would see the House consider a new bill containing a face-saving provision on making the package more friendly to small businesses.

President Barack Obama and his Democratic allies have kept up relentless pressure on the House Republicans in recent days to back a Senate deal that would extend the payroll tax for two months.

Unlike other budget stand-offs this year, this dispute has exposed Republican divisions.

Earlier on Thursday, Senate Republican Minority Leader Mitch McConnell broke his silence to urge his colleagues in the House to pass the measure.

Two new House Republican lawmakers also released statements on Thursday calling for a vote, breaking the unified front shown by members of that chamber in a news conference on Tuesday.

Conservative Republicans were initially sceptical about extending the payroll tax break, which economists have said would aid US economic recovery.

But Democrats accused them of supporting tax cuts only for the wealthiest Americans.

Correspondents say Republicans could not be seen to preside over an effective tax rise for middle-class Americans with a general election year looming.
http://www.bbc.co.uk/news/world-16310008

[Patrick Degan]

"Why not do the right thing for the American people, even if it's not exactly what we want."

That's the soundbyte John Boehner handed to the Democrats on a silver platter.