Cantor to Reid: Call the Senate back to address the payroll tax cut

posted at 6:05 pm on December 20, 2011 by Tina Korbe

House Majority Leader Rep. Eric Cantor took a recent interview on Bloomberg television as an opportunity to spin the House’s rejection of the Senate payroll-tax-cut bill.

“Honestly, the papers, the bill, is back in to the Senate now,” Cantor said.  ”We have acted in the House, rejected the 60-day extension and said we want a year.  So the Senate will now have to act. If the taxes expire on Harry Reid’s watch, he will have to answer to the people. Again, I would ask, what does Harry Reid have in for the middle class?  We want to be there to help the middle class and working people of this country with certainty. That is what the president wants and that is what we want. We should go ahead and accomplish that prior to the end of the year.”

He explicitly invited Reid to recall the Senate to business. “I would urge Harry Reid to come back to town, appoint conferees, and let’s get this going,” he said.

Cantor’s ability to hew to the Republican line in this case is admirable and impressive. I just can’t do it. The payroll tax cut debate has given me a severe case of whiplash. Indulge me as I now try to straighten out the details.

To hear House Republicans talk about it now, you’d think they had proposed and championed a yearlong extension of the payroll tax cut from Day 1. Actually, the president proposed and championed it. Republicans, sensibly, opposed it as bad policy. Yes, that put them on thin ice politically because the majority of the American people liked (and still like) the idea of a payroll tax cut extension. But legitimate objections to the extension could be made — and still can. Ed puts it perfectly:

The cut in revenue to the Social Security fund expands the already-significant deficit between revenues and benefit payments in SSA, which means that more money has to come out of the general fund to cover the gap — and that means more deficit spending.  That might make sense if the cut produced a burst of economic growth, but just like the Making Work Pay tax cut in Obama’s stimulus package and the Bush withholding-tax reduction in 2008, the payroll-tax holiday failed to produce any such momentum in 2011.

Initially, another principled reason to oppose the president’s payroll tax cut proposal existed: He wanted to pay for it with a surtax on millionaires, which Republicans repeatedly resisted as a tax cut on job creators.

But, then, House Republicans had an idea: What if they gave the president his payroll tax cut extension in exchange for the Keystone XL Pipeline, a true job creation measure? They passed a bill that gave Obama the extension exactly as he wanted it — in yearlong form — on condition that he approve the Keystone XL Pipeline. The president said he’d veto the bill if it passed the Senate with the Keystone provision intact. That’s how beholden Obama felt at the time to environmentalists.

But as negotiations played out, Obama and Democrats came to their senses: They realized they wouldn’t lose the environmentalist vote if they approved Keystone. (What? Would enviros ever really vote Republican?) So they agreed to Keystone (and to spending offsets other than a surtax on millionaires) in exchange for the payroll tax cut. But, oddly, they negotiated a two-month tax cut instead of a yearlong cut. And, yes, by “they” I mean Democrats. In hindsight, it appears the two-month time frame was for the benefit of Democrats, not Republicans.

Why would Democrats want the two-month cut instead of the yearlong cut? Because they didn’t want to give the issue up as a political boon. It allowed them to criticize Republicans for hypocritically opposing a tax cut. They settled for Keystone and offsets in exchange for the ability to again bash GOPers over their opposition to the tax cut extension two months from now. For that, they depended on Republicans continuing to oppose the extension as bad policy.

The House didn’t want to play along. Thankfully for them, a study came out to demonstrate that a two-month tax cut would be unworkable, allowing them to focus on the timeframe, rather than the tax cut extension itself. They conceived of a new line that is conveniently consistent with years-old Republican rhetoric about the need for certainty in business and personal financial planning: A two-month tax cut extension is a source of too much uncertainty for taxpayers.

But here’s the problem: Whether it’s for two months or a year, a payroll tax cut extension is bad policy. (Have I mentioned that yet?) In the context of comprehensive Social Security reform, it might make sense to tamper with the payroll tax. But as a half-hearted, gimmicky gesture to pander to the middle class, it doesn’t. That is, it makes political sense — but not policy sense.

To me, this entire episode epitomizes the problems with Washington. Politics seemingly always trump principle. Again and again, politicians justify their support for bad policies with this defense: “If I don’t support this poor policy, I won’t be reelected because my opponents will use it against me. So, I’m going to support this poor policy so as to be reelected — and, then, I’ll implement sound policy.” But they never quite get around to the sound policy-making.

Unfortunately, we have nobody to blame for this phenomenon but ourselves. As Ann Coulter has put it, the problem is not with politicians. It’s that we, the people, want our treats. In this case, it’s the payroll tax cut extension. At some point, we’re gonna have to sober up and realize the solutions to our problems don’t lie in Washington: They lie in personal responsibility. Yes, these are difficult economic times, but that doesn’t mean now is the time to look to Washington for a handout. Now is the time to find the resources within ourselves to work more creatively or more energetically to make ends meet, to volunteer to help a hard-up neighbor (trusting that that neighbor will, in turn, help us in our time of need) and, above all, to remember that the spiritual has primacy over the material, not the other way around.


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