Another DC Deadlock

Here we go again.

A likely vote in the House of Representatives Tuesday will confirm what we already know: The bill passed by the US Senate extending the payroll tax cut is dead.

In a deal struck by Senate leaders Harry Reid and Mitch McConnell, the bill would  continue the payroll tax cut and some extended unemployment benefits for another two months. The price: expedited review of the completely unrelated Keystone pipeline from Canada to Texas, which the State Department had put on hold until 2013.

But Speaker of the House John Boehner couldn’t sell the terms to Tea Party Republicans, who flat-out rejected it. Sound familiar?

And now, barring a Christmas-eve deal, a big lump of coal in the form of a payroll tax increase may land in everyone’s stocking after New Year’s.

President Obama meets Congressional leaders during debt-ceiling negotiations in July. Official White House Photo by Pete Souza.

At first glance, it looks a lot like last summer’s debt ceiling disaster, when Tea Party congressmen essentially caused a downgrading of the US’s AAA credit rating, and editorial writers are in high dudgeon about it.

But this time, I think the Tea Party has it right. Here’s why:

  • The payroll tax cut does nothing to create jobs; it only maintains consumer spending at current depressed levels and maybe saves some jobs. Back in September I argued that President Obama missed yet another opportunity to propose a real stimulus package based on infrastructure spending. That would have been worth fighting for.
  • The payroll tax pays for Social Security, so if you cut payroll taxes now, you’ll have less to pay for Social Security in the future.  I thought we were trying to save Social Security, not bankrupt it quicker.
  • Two months is a ridiculously short time, creating even more uncertainty. Are we going to have to go through the same charade in February?

The payroll-tax-cut extension is bad policy but good politics: Democrats can now argue that Republicans want to cut taxes for the rich but raise them on the middle class, a good card to play in an election year.

But let’s say high unemployment goes on for years, as is likely in a debt recession of the kind we have now. Are we going to keep renewing programs that are not achieving their goals, like the payroll tax cut and extended unemployment benefits? At what point does somebody say, we just can’t afford this anymore?

Sure, people will suffer—and that’s why I support the food stamp safety net, because I don’t want to see Americans starve—but is the government going to be in the income maintenance business forever?

All big questions, which you won’t see addressed in Washington, DC. Instead we see brinkmanship, politics, and posturing. No wonder Congress has an 11% approval rating, its lowest ever. It deserves it.

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