Monday, February 13, 2012

GOP Caves on Payroll Tax Cut Extension

House Republicans caved on their demand that any extension of the current, lower level payroll tax - a tax that every working person pays each paycheck - be linked to spending cuts in other areas of the government budget.

Essentially, they were a) very ready to let the vast majority of working people in the US experience a tax hike by letting the payroll tax go back to previous, higher levels, or b) accept the payroll tax cut extension, but exacting a high price by demanding cuts to other programs to offset.

What? How could this be you ask? Aren't the Republicans universally and non-debatably committed to lower taxes for everyone until the end of the universe? Shouldn't keeping taxes low for everyone be a no-brainer for them? Especially in an election year?

Ah...well, you must not know the Republican Party that well if you're asking that question.

Indeed, there are two reasons why in this case the Rs are perfectly willing to let everyday people get a tax hike by letting the payroll tax cut expire while championing big tax cuts for the wealthy and corporations:

1) Primarily, such antics are tied to the conservative "starve the beast" strategy - a several-decades long effort to shrink the size of government. Ironically, the government grows under their leadership (see the Regan and W years). But anyway, over last 25 years or so, the Rs have demanded that all expenses (or reductions in revenue) be "paid for" by cutting government programs. Starve the government of revenue and use that as an excuse to cut its very size. A good overview of this is in a blog post today from Talking Points Memo. See it HERE. In this instance, Republicans put on their "fiscal conservative" hat and said that if the payroll tax cut were to be extended, then certainly the lost revenue would have to be made up by cuts elsewhere...affixing the payroll tax to their desire for small government.

2) Giving tax cuts to middle and lower class people is NOT part of Republican political or economic philosophy. It never has been. Rather, they maniacally believe that if you lower taxes on the wealthy and companies (not to mention eliminate regulations), these "liberated" private powers will share their wealth with the rest of society in the form of creating jobs and addressing societal needs. If you are a poor or middle class person waiting for the Republican Party to usher in low tax rates for you, you'll be waiting a long, long time.

In the end, the Rs caved on the current payroll tax cut extension - primarily to the political pressure of being seen as, well, being against lower taxes for working people in an election year. Oh, and by the way, the Republicans caved on they payroll tax and agreed to offset it with...debt.

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