The GOP's Payroll Tax Fiasco

[Bad_Daddy 2,209]

http://online.wsj.com/article/SB10001424052970204791104577110573867064702.html?mod=WSJ_hp_mostpop_read

REVIEW & OUTLOOK DECEMBER 22, 2011

The GOP's Payroll Tax Fiasco

How did Republicans manage to lose the tax issue to Obama?

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.

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%. 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. The entire exercise is political, but Republicans have thoroughly botched the politics.

Their first mistake was adopting the President's language that he is proposing a tax cut rather than calling it a temporary tax holiday. People will understand the difference—and discount the benefit.

Republicans also failed to put together a unified House and Senate strategy. The House passed a one-year extension last week that included spending cuts to offset the $120 billion or so in lost revenue, such as a one-year freeze on raises for federal employees. Then Mr. McConnell agreed with Senate Majority Leader Harry Reid on the two-month extension financed by higher fees on Fannie Mae and Freddie Mac (meaning on mortgage borrowers), among other things. It passed with 89 votes and all but seven Republicans.

Senate Republicans say Mr. Boehner had signed off on the two-month extension, but House Members revolted over the weekend and so the Speaker flipped within 24 hours. Mr. Boehner is now demanding that Mr. Reid name conferees for a House-Senate conference on the payroll tax bills. But Mr. Reid and the White House are having too much fun blaming Republicans for "raising taxes on the middle class" as of January 1. Don't be surprised if they stretch this out to the State of the Union, when Mr. Obama will have a national audience to capture the tax issue.

If Republicans didn't want to extend the payroll tax cut on the merits, then they should have put together a strategy and the arguments for defeating it and explained why.

But if they knew they would eventually pass it, as most of them surely believed, then they had one of two choices. Either pass it quickly and at least take some political credit for it.

Or agree on a strategy to get something in return for passing it, which would mean focusing on a couple of popular policies that would put Mr. Obama and Democrats on the political spot. They finally did that last week by attaching a provision that requires Mr. Obama to make a decision on the Keystone XL pipeline within 60 days, and the President grumbled but has agreed to sign it.

But now Republicans are drowning out that victory in the sounds of their circular firing squad. Already four GOP Senators have rejected the House position, and the political rout will only get worse.

One reason for the revolt of House backbenchers is the accumulated frustration over a year of political disappointment. Their high point was the Paul Ryan budget in the spring that set the terms of debate and forced Mr. Obama to adopt at least the rhetoric of budget reform and spending cuts.

But then Messrs. Boehner and McConnell were gulled into going behind closed doors with the President, who dragged out negotiations and later emerged to sandbag them with his blame-the-GOP and soak-the-rich re-election strategy. Any difference between the parties on taxes and spending has been blurred in the interim.

After a year of the tea party House, Mr. Obama and Senate Democrats have had to make no major policy concessions beyond extending the Bush tax rates for two years. Mr. Obama is in a stronger re-election position today than he was a year ago, and the chances of Mr. McConnell becoming Majority Leader in 2013 are declining.

***

At this stage, Republicans would do best to cut their losses and find a way to extend the payroll holiday quickly. Then go home and return in January with a united House-Senate strategy that forces Democrats to make specific policy choices that highlight the differences between the parties on spending, taxes and regulation. Wisconsin freshman Senator Ron Johnson has been floating a useful agenda for such a strategy. The alternative is more chaotic retreat and the return of all-Democratic rule.

Printed in The Wall Street Journal, page 16

JOIN THE DISCUSSION

1008 Comments, add yours

[Bad_Daddy 2,209]

http://blogs.wsj.com/washwire/2011/12/21/gingrich-to-house-gop-give-in-on-payroll-tax/

Gingrich to House GOP: Give In on Payroll Tax

DECEMBER 21, 2011, 12:13 PM ET

By Jonathan Weisman

DES MOINES, Iowa – Former House Speaker Newt Gingrich, who famously lost budget battles to President Bill Clinton amid two government shutdowns, had some advice to House Republicans at loggerheads with another Democratic president: Give in.

“Incumbent presidents have enormous advantages. And I think what Republicans ought to do is what’s right for America. They ought to do it calmly and pleasantly and happily,” Mr. Gingrich said when asked about the clash between President Barack Obama and House Republicans over extension of the payroll tax cut.

Mr. Gingrich made it clear he favored a one-year extension of the two-percentage point payroll tax cut, which expires Jan. 1, not the two-month extension that passed the Senate with bipartisan support. He called the Senate bill “an absurd dereliction of duty.”

“Obama is so inept as a president, and the Congress is so dysfunctional as an institution, that we are lurching from failure to failure to failure,” Mr. Gingrich said.

He offered sympathy to House Speaker John Boehner for having to negotiate with “a Senate majority leader who is totally disruptive and a president who is basically campaigner-in-chief, who has no interest in solving the problems of the American people.”

But he said resistance was doomed.

“It’s very hard for the legislative branch to outperform the president in communications,” he said. “He has all the advantages of being one person. He has all the advantages of the White House as a backdrop, and my experience is presidents routinely win.”

In 1995 and 1996, President Clinton successfully used the bully pulpit to paint his budget fight with then-Speaker Gingrich as a battle over Medicare and environmental protection, not a fight over runaway government spending. The two government shut-downs badly hurt the Republican Party and helped Mr. Clinton get off the mat and cruise to re-election.

The fight in Washington over the payroll tax is seeping into the race for the White House. Rep. Michele Bachmann of Minnesota appeared on morning shows Wednesday and muddled the Republican message that the party is now for the president’s proposed payroll-tax extension. She fell back on the original position of many conservatives, expressing opposition both to a two-month and a one-year extension and calling them gimmicks that would not spur businesses to hire new workers.

Edited December 22, 2011 by Why_Me