Payroll Tax Holiday Royally Screws Republicans as Obama Plows Ahead with Jobs Agenda

This month's jobs report was a pleasant surprise to the American people, with the unemployment rate dropping to 8.6% from 9% last month. While the drop in the unemployment rate was due in part to some people leaving the workforce, it is also due in large part to the fact that as 140,000 private sector jobs were added this month (Republican governors and state legislators did their best to hold down employment by eliminating 20,000 public sector jobs last month), the last two months' jobs numbers were also significantly revised up. That brings the number of private sector jobs created this year to nearly 2 million.

President Obama wasted no time promoting his jobs agenda on the occasion of this news, showing up with President Clinton to bolster his case



As the New York Times reports, the overall numbers and medium term trends have been positive:
Employment in the previous two months was revised upward substantially, and the report showed that companies have been taking on more and more temporary workers, indicating that more permanent hires may be in the cards, too.

Other recent economic reports have also been positive, including increases in help-wanted advertising, retail sales and auto sales in particular; decreases in jobless claims; and a loosening of credit conditions for small businesses. Perhaps most encouraging was a recent survey of small businesses that found hiring intentions to be at their highest level since September 2008, when Lehman Brothers collapsed.
This is crucial. Small businesses not only employ half of all American workers, they also create two out of three new jobs. When small businesses are gearing up their plans to hire, it indicates that they are looking at increasing consumer demand for their products. If the current holiday shopping season is any indication, consumer demand is indeed up.

And this is freaking Republicans out. That the President's jobs agenda is working is largely a testament to his policies of economic stimulus, targeted payroll tax relief for working people and investing in America as much as he can despite Republican hostility to American domestic employment. And part of this agenda, the payroll tax cut, is tearing into the fabric of Republican unity. The party leadership is worried that given the fact that President Obama is winning the message war on jobs, Republicans could be punished next year if they don't extend the payroll tax cut. The "rank and file" - umm, i.e. the crazy Teabaggers - do NOT like giving tax breaks to anyone but the super rich, not if they can't also gut the social safety net.
The current one-year tax cut for workers ends after Dec. 31, and Mr. Obama has proposed an even bigger tax cut for another year that also covers employers, paid for with a surtax on those with more than $1 million in annual taxable income. Republicans oppose the surtax and they are split over whether to extend the payroll tax cut, with many dead set against further temporary stimulus measures. [...]

Mr. [Jeff] Flake [R-AZ] said, “We should not be extending the payroll tax holiday unless we have the courage to reform entitlement programs as well.”

Republicans voiced several concerns. First, they said, the tax cut could undermine the Social Security trust fund. Second, they said, extension of the tax cut would have a substantial cost, nearly $120 billion in one year. Third, they said, the cost would be incurred in one year, but offset over 10 years. Finally, they said, Congress could find itself in exactly the same situation at the end of 2012.
The problem with their logic, of course, is that it's idiotic. The payroll tax cut does nothing whatsoever to undermine the Social Security Trust Fund, since revenue is taken from general fund to compensate for that. But the truth of the matter is this is precisely the reason the Right wing opposes the payroll tax cut. They are against a social safety net program being even partially funded by revenue that comes from a progressive part of the tax code, namely the income tax.

Second, cost. Really? The same airheads who want the Bush tax cuts for the rich extended without paying for them in any way are worried about the cost of a tax cut to the working Americans and small business? I thought tax cuts didn't have to be paid for! And it IS paid for, with a surtax on millionaires. Oh no, a tax on "job creators!" Well, the good news is this very plan lets those "job creators" earn back their surtax if they just employ enough people from the reduction they will get on the employer side of the payroll tax!

Yes, Congress could find itself in the same situation at the end of next year. And they should. Because as I said before, the payroll tax is a flat tax - a regressive tax that burdens the poorest the most. Maybe next year Congress can do its job and come up with a leaner, cleaner tax code that eliminates loopholes and relies on a progressive income tax to fund more programs, including social safety nets.
Representative Charles Boustany Jr., Republican of Louisiana, said, “The leadership was hoping there would be broad acceptance of the package they presented, but there wasn’t.”

Republican leaders said they were trying to figure out how to address their members’ concerns, as part of a legislative package that could also include an extension of jobless benefits for the long-term unemployed and a measure to spare doctors from a 27 percent cut in their Medicare reimbursements, scheduled to occur on Jan. 1.
The GOP is screwed. Royally. Their leadership promoted the crazies, and now the crazies are coming back to bite them in the ass. They don't care if what they are about to do - that is, raise taxes on ALL working Americans - will end their dreams of holding on to power in Congress and much of the state houses, they are true believers. They believe in their heart of hearts that the rich pay too much in taxes and that the poor pay too little. That leaves the Republican leadership in a precarious situation: they can rescue themselves by working with Democrats and passing a version of the payroll tax extension while leaving behind their own wingnut base (who will subsequently chew their heads out), or they can go with their wingnut base and all be turned out of office en masse. Lose, lose.

And that's only from an internal GOP perspective. From the perspective of voters, the GOP dilemma fits very nicely into the pattern of them being against helping working individuals and families. The assault they launched on working people in Wisconsin and Ohio at the beginning of this year is continuing with them blatantly wanting to raise taxes on the working people of America during the holidays. The Republicans are also, in the process, destroying their own falsehood that tax cuts do not have to be paid for because the tax fairy will come in and sprinkle tax fairy dust on the treasury.

This is President Obama's genius. He didn't even have to do anything other than to get this in last year (while  everyone on the Professional Left was whining about Obama having "caved in" on the Bush tax cuts) and have the foresight to see that Republicans would end up this year exactly where they have ended up. In disarray, squirming, fighting with each other openly, blowing themselves up. President Obama and Democrats are winning, and we are winning by doing the right thing. I leave you with this excellent segment from Rachel Maddow to put it to you stunningly well:



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