The payroll tax cut is a gimmick
By Brian Schoeneman | Thursday, December 22nd, 2011 | Catch-All, Policy, PoliticsSince the earliest days of the Roman Republic, politicians have figured out that an easy way to curry favor with the electorate is to hand them money. Nowadays, handing out cash for votes is frowned upon (although it’s still a common occurrence in some cities, like Baltimore where I grew up) so modern politicians have to be more careful and crafty in doing it.
Less than ten years ago, Democrats were up in arms over the rebate checks President Bush was sending to every American taxpayer. Even to this day, they’re still attacking Republicans for the rebate check business, accusing Republicans of borrowing billions to hand out to people to curry favor.
Fast forward to today, where Democrats are again up in arms about the Republican failure to pass a two month extension of President Obama’s payroll tax holiday. Accusing Republicans of hypocrisy for not supporting a tax cut, the Democrats and their allies on the left have been gleefully slamming Speaker Boehner for not passing the two month extension, despite the fact that private experts have said the two month extension isn’t workable. This is a convenient issue for Democrats, because it lets them try and back Republicans into a corner. It’s too bad they couldn’t have picked a legitimate issue, like the UI extension. And it’s too bad that House Republicans aren’t willing to call a spade a spade and chastise the Democrats for stealing billions from social security to hand out to people to curry favor.
Let’s be honest. The payroll tax holiday/cut is a gimmick. It’s the Democratic version of the Bush rebate checks, but unlike those rebate checks – which were passed as part of a larger tax cut package that was introduced during a period where we still had projected surpluses – the payroll tax cut is much harder to justify.
President Bush rightfully noted that when a government has major budget surpluses, it is taxing too much. Thus, rebate checks. While they were still gimmicky – I would have rather saved that money for a rainy day, which we clearly needed – they at least had a legitimate policy basis. They were also one-time deals, and no one could get used to them because they didn’t happen often enough to become expected.
The payroll tax cut is on much shakier ground. The president claimed that the payroll tax cut was designed to ease pressure on working families in the midst of the unemployment and economic crises. Fine. But this was never designed to be a permanent payroll tax cut and unlike an income tax reduction, a permanent reduction in the employee side of the payroll tax isn’t sustainable, because the money isn’t just going into the general treasury. The payroll tax pays for one thing – social security. And until we see projections that the total we’re spending on social security is going to go down, there’s no good reason to permanently reduce the payroll tax. All it does is push social security closer to insolvency for little economic impact. Unemployment right now is the biggest threat to the economy and this payroll tax cut won’t create a single job.
Instead of pandering with a payroll tax cut, it would be better if we simply left payroll taxes alone and focused on creating jobs – like the thousands of jobs that will be created if the Keystone XL pipeline is approved. That’s far more important to far more Americans than a payroll tax cut. But that doesn’t make nearly as good political theater.
And that’s why all you’re going to hear about before Christmas is this standoff. Unfortunately, the standoff isn’t between those who oppose extending the cut and those who favor it, it’s about Republicans and Democrats fighting over the length of the extension and posturing over Christmas vacation optics. That’s a shame, because there’s a good policy debate in here and we’re ignoring it to play politics.
It’s time for Congress and the White House to stop pandering to the people and start doing what we sent them there to do – govern. And right now, that means fixing problems and getting the economy back where it needs to be.
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About the author
A veteran political professional, long-time Republican party activist and attorney Brian W. Schoeneman has been offering his opinions at Bearing Drift since 2010. He serves on the Board of Virginia Line Media, LLC, which operates Bearing Drift and spends his days representing the U.S. Merchant Marine in Washington, D.C. He hails from Fairfax County, Virginia, where he lives with his wife and son.
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12 Responses to "The payroll tax cut is a gimmick"
Lets face it…gimmicks work! Both Democrats and our own party use them with great success. Unfortunately, Boehner and Cantor severely mishandled this ‘gimmick’ and our party is on the losing end for it.
The WSJ is correct, Boehner needs to get the Senate bill passed and cut his losses.
An excellent evaluation.
It really bothers me that other Republicans are unable to communicate on this issue.
First Barry and the demo-morons dance around like a bunch of cannibals bleating how evil the Tea Party is for wanting tax cuts, then they bleat how evil the Tea Party is for not wanting tax cuts. Maybe they need new meds.
Personally I would just let these taxes that pay for social security go back up. Really do not want to turn my mother into a bag-lady living on the streets.
However if you want to extend them, at least decrease spending to help pay for that. Stop giving billions of dollars to solar panel companies. That bubble is starting to pop now.
But it is election season now and politicians are starting to go insane.
TANSTAAFL guys.
Perhaps Barry and the demo-morons should go to China and beg the Chinese peasants for more money to pay for their insane spending schemes.
Okay, let’s face it, when we have Republicans bringing things to a standstill because they won’t agree to the extension of a TAX CUT, that’s got nothing to do with policy.
As a Facebook friend of mine noted, if Obama were to announce that he was resigning, the House Republican Caucus would all reflexively rush to microphones to endorse him for re-election before they stopped to think about what he’d said.
Old geezer: It’s a tax cut. According to the GOP, those don’t have to be “paid for.”
Perhaps a few posters have forgotten that this is republican against republican as well. Senators don’t much like it when a deal they were informed was a deal gets blown up at the last minute by tea party republicans.
Further, since it is a two month extension, they will soon be discussing this deal anyway. So you blow you natural advantage and pick a fight that makes Cantor and his caucus look idiotic?
Listen to the WSJ.
We should not be even needing to vote on this legislation! Was it not a couple months ago that Washington was screeming the sky is failing the sky is falling if the Debit limit was not raised! And it was with certain requriements to offset: set up the Super Committee ( a committe created to do the work of Congress) to come up with ways to offset and all they came up with was more taxes and then there was the automatic cuts accross the board on Federal spending and now they want to suspend the automatic cuts!! So it will end up that the Debt Limit went up without the supposed restrictions (cuttin spending) going into effect. That is call “gotyou” American Taxpayer again. Whati is going on now the payroll tax “cut” will result in an employee receiving an extra $500 to $2,000 per year. It will also reduce the revenue stream to SSA and Medicare by over $100 Billion a year. It will also increase the income of the employee by the extra $500 to $2,000 a year, which will increase his/her IRS burden. And this will help how? Oh ya it will help Social Security Fund go broke even sooner! The unemployment extension is a joke what are they going to do extend it until an employer comes to their front door and offers them a job! There are jobs out there but they are not the jobs alot of the unemployed want and/or dont pay that much more than what they are getting from unemployment. Its called a disinsentive to work and it works. I do think the should do something to keep from cutting the Medicare reimbursement to physicians by 27% will speed the exit of Medicare accepting physicians, making it harder for Medicare recipients to find an attending physician. As it is more and more physicians dont accept Medicare. And it gets me about not allowing the Keystone pipeline from being built. IF you want to help the unemployed Mr. President allow it to be built. Initially 30,000 well paying (union type) will be created and just released data states that by 2015 over 200,00 jobs will be created with in the neighborhood over 100 Billion reveneue created! Not counting lessoning the dependence of Middle East crude oil which helps in many cases to finance the terrorists. But dont allow the pipeline and it then will be built to accomodate the China’s eocnomy you know the country that has alot of our debt. I am not happy with the R and D in Washington but what is it about the Democrats and the President that they have to go on Vacation and dont have time to talk and negotitate? But the mob mentailty of that Party is it is either my Way or the Highway and they are not getting their way at this point.
“The payroll tax cut is a gimmick”
Of course it is. It’s a distraction. What are NOT talking about?
What we’re NOT talking about is a huge Constitutional issue: how the democrats and republicans just agreed to abrogate the Constitution and suspend Habeas though indefinite detention, based on mere suspicion, of US citizens by the US military, calling US soil “the battleground.”
Instead, we’re talking 24/7 about how those dems and repubs really really hate each other, and how they’re dukeing it out in a no-holds-barred death match over…extending a tax cut.
See the gimmick now?
Jamie – the detention issue is a done deal. There’s nothing to talk about. It will be resolved in the courts the first time someone is arrested and detained under those provisions.
In the meantime, there’s active legislating going on. At least, there was, until Boehner caved and gave the Democrats what they wanted.
[...] objective. So, even though the Democrats are advocating for extending the payroll tax cut as a political gimmick, they have actually stumbled into a policy that should be embraced and even co-opted by the [...]
Brian S: Well, not really. What the president and the Dems really wanted was a clean bill extending it for a year, but they couldn’t get that so they asked for the two-month extension.
[...] after a quick link from the Drudge Report on Bearing Drift, the servers simply gave up the ghost. This, after being linked to by [...]
This legislation is more than just a gimmick. From an accounting perspective, this stop-gap extension is a nightmare for payroll. It comes in the middle of tax season and will end up costing both businesses and our government more money due to compliance errors and increased workload.
http://www.taxpolitics.com/2011/12/payroll-extension-havoc/
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