Wow, when even the notoriously extreme right-wingers who run the Wall Street editorial pages are annoyed with John Boehner’s Tea Party led revolt against the Republican members in the Senate, the GOP must really be in trouble. Pass me the popcorn!1
GOP Senate leader Mitch McConnell famously said a year ago that his main task in the 112th Congress was to make sure that President Obama would not be re-elected. Given how he and House Speaker John Boehner have handled the payroll tax debate, we wonder if they might end up re-electing the President before the 2012 campaign even begins in earnest.
The GOP leaders have somehow managed the remarkable feat of being blamed for opposing a one-year extension of a tax holiday that they are surely going to pass. This is no easy double play.
Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter, although he’s spent most of his Presidency promoting tax increases and he would hit the economy with one of the largest tax increases ever in 2013. This should be impossible.
(click here to continue reading Review & Outlook: The GOP’s Payroll Tax Fiasco – WSJ.com.)
except for the part where the WSJ is wrong:
A mostly irrelevant side note to the Wall Street Journal op-ed everyone’s talking about is that they don’t seem to know what policy they’re talking about.
“House Republicans yesterday voted down the Senate’s two-month extension of the two-percentage-point payroll tax holiday to 4.2% from 6.2%,” the editors wrote. “They say the short extension makes no economic sense, but then neither does a one-year extension. No employer is going to hire a worker based on such a small and temporary decrease in employment costs, as this year’s tax holiday has demonstrated.”
They seem to have their payroll tax cuts mixed up. The two percent holiday that’s been in effect for the past year, and the extension Congress is fighting about right now, are both to employees’ share of the Social Security FICA tax. The theory behind the policy is that by increasing worker take-home pay, the cut provides suffering consumers with additional purchasing power, and thus stimulates demand, which is exactly what this sluggish economy needs.
Earlier in the year, President Obama proposed broadening this tax cut to include the employer share of the Social Security FICA tax. That policy operates on the theory that reducing cost-per-employee will create the incentive for job creation. It’s a weaker theory — a lot of big employers are already sitting on a bunch of cash, but aren’t hiring because they don’t have enough customers (see above about demand). But this is what the Wall Street Journal’s editors seem to think has been going on all year — and they’re completely wrong.
(click here to continue reading Sidebar: Blistering Wall Street Journal Op-Ed Gets Payroll Tax Cut Wrong | TPMDC.)Footnotes:
- as the cliché goes [↩]