GOP caves on payroll tax cut

GOP caves on payroll tax cut

December 24th, 2011 in Opinion Times

House Republicans finally accepted the political reality Friday that they cannot rationally defend their insistent protection of the ruinous Bush tax cuts for the ultra-rich 1 percent while callously rolling back meager tax cuts for the nation's broad middle class -- the 160 million Americans whose temporary Social Security payroll tax-cut would have expired next Saturday if the GOP's tea party wing had had its way.

So with President Obama having called their bluff about walking away from a deal, they at last conceded just before Christmas Eve to approve the bipartisan Senate bill to extend the payroll tax cut and long-term jobless benefits for another two months. That will allow time for negotiations in January and February for a year-long extension of these vital measures.

In fact, House Republicans had no viable alternative. Their threat to let the payroll expire if they couldn't get the lopsided deal they demanded was not sustainable. Their concession was not just a victory for the president's agenda; it was a sensible victory for American workers, whose jobs, incomes and peace of mind have been unsettled since the Great Recession roiled the economy in the wake of the 2008 financial implosion. Americans didn't want, and surely did not need, another round of House Republicans' theatrics, threats and crisis-laden congressional warfare, especially not at Christmas.

Many American workers have not had a pay raise in the last three years, and unemployment has just begun to fall below the forbidding 9 percent level. The payroll tax cut, which amounts to about $1,000 a year for the average family with a household income around $50,000, has become a needed if modest cushion against the inflation since 2008 in gas, utility and food bills. It's not much over a year, but it's important. The sum total for 160 million workers does make a significant difference, as was intended, in the overall level of consumer spending that drives the economy, and that builds and secures the job base against yet more cuts.

The payroll tax cut means that the deduction for employees' Social Security taxes will remain at 4.2 percent, rather than 6.2 percent, at least for the next two months. The cost of that tax cut will be mostly offset by taxes on real estate transactions. The temporary bill will also extend current levels of Medicare reimbursements, which were due to be cut, to doctors who accept Medicare patients.

President Obama and Democrats have reasonably sought to finance a year-long, and 50 percent larger, payroll tax by imposing a modest surtax on annual incomes above $1 million. That reasonably would mostly fall on the mega-millionaires and billionaires whose fortunes have soared under the high-end Bush II tax cuts on dividends and capital gains. Their share of national income is well above 20 percent and is now at an 80-year high. Republicans, of course, will continue to oppose that sensible means of financing the payroll tax cut in favor of more cuts in America's tattered safety-net programs for ordinary wage-earners.

In another bit of political gamesmanship by Republicans, the current temporary measure will also require President Obama to make a decision next year on the proposed Keystone XL pipeline, which Canada wants to build from its tar sands fields in Alberta south through six midwestern American states to the Gulf of Mexico, largely for export abroad.

Linking the pipeline project and its relatively few temporary American jobs is not about decreasing American joblessness, as Republicans claim. Rather, it constitutes another needless threat to the environment and a gratuitous gift to corporate interests of valuable American farm and ranch land, all as a favor to the multinational oil industry. Obama should deny the pipeline federal rights to eminent domain in America.

These are issues yet to be resolved. For the moment, at least, American workers can give thanks at Christmas that the tea party hasn't yet destroyed the modest tax break and economic stimulus that is helping sustain their incomes.