Since 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.
