A major shift in the payroll debate

[ProSense]

A major shift in the payroll debate

By Steve Benen

For months, Republican leaders have balked at the notion of a payroll tax-cut extension. Despite the fact that the tax break was largely their idea in the first place, GOP officials have said they would block President Obama’s request, regardless of the economic consequences.

But Democrats assumed this position was untenable, and they were right. If the payroll break, approved last December, expires at the end of the calendar year, over 100 million U.S. households would see a fairly significant tax increase during difficult economic times — and it would be entirely Republicans’ fault.

Sure, the standard GOP response is that they disapprove of the particulars, most notably the fact that Dems would pay for the tax-cut extension with a modest surtax on millionaires and billionaires. But as David Firestone explained yesterday, that still leaves the GOP in an awkward position.

Are Republicans going to deny the average working family a $1,500 tax break in order to spare millionaires a modest increase? That $1,500 or so, multiplied by every paycheck in America, would have a huge effect on economic growth next year, widely estimated as between 1.5 and 2 percentage points. The tax increase would affect only a tiny fraction of small businesses with employees, despite the endless Republican claims that it would stifle job creation.

If Republicans refuse that deal, it will play directly into Democratic hopes of shaping next year’s election around the increasingly popular theme of income inequality. (“Why did your taxes go up? So that Republicans could protect millionaires.”) They could pay for it with cuts to federal programs that benefit the middle class, which would be self-defeating. Or, if they approve the payroll tax cut without paying for it (as they did last year), that would increase the deficit and reveal the Republican hypocrisy in preferring low taxes for the rich over deficit-cutting.

Either way, the anti-tax crowd is boxed in.

This point is not lost on Republicans, who just yesterday, started changing their tune. After months of saying they would oppose an extension, GOP leaders finally said they would support another year of the payroll break — but only if it’s paid for in some other way.

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Republicans are caught between a rock (tax hike) and a hard place (trigger).

[Bluzmann57]

1. The repukes brought it on themselves

They got themselves into this mess, let them get themselves out of it. Either way, they're screwed.

[WI_DEM]

2. 'only if it's paid for some other way'--Dems should stand pat and force the GOP to protect

the millionaires and billionaires. (I have to say I'm not sure I support this tax cut either. I think it should be allowed to die along with the Bush tax cuts).