Another tax-cut showdown

Another tax-cut showdown

February 9th, 2012 in Opinion Times

When it comes to extending the payroll tax cut and jobless benefits, Republicans seem determined to keep shooting themselves in the foot. You would think they learned their lesson from the backlash in December, when they were finally forced by public pressure to extend the payroll tax cut -- though they agreed then to just a two-month extension, and not the full year requested by President Obama to help families in a still fragile economy.

Now that the issue has returned -- the current cut will expire on March 1 -- both parties say they want to extend the cuts for the rest of the year. They should do so. The temporary 2- percent cut in the 6.5 percent Social Security payroll tax would significantly boost the take-home pay of 160 million American families, the broadest range of the nation's middle class, and, in turn, the range of consumer spending that is strengthening the economy.

But though both sides say they favor extending the tax cut, they differ over the terms of a deal in ways that suggest disinterest among Republicans in actually approving an extension.

Democrats want to levy a modest surtax on Americans with annual incomes of over $1 million, the largely undertaxed top of the top 1 percent of earners. With Republicans still in opposition to that, Democrats also propose plugging some corporate tax loopholes and using some of the savings from winding down the war in Afghanistan.

Republicans, by contrast, want to slash another $70 billion from the federal budget by freezing pay for federal employees for a third year, raising Medicare premiums for some recipients, and taking back some planned subsidies intended to help families to buy health insurance under the health care reform law.

Their proposals would pay just part of the $90 billion cost of extending the payroll tax cut. Yet they remain wrongly determined to avoid even a modest tax hike on the ultra-wealthy, who benefited so disproportionately from the high end tax cuts awarded by President George W. Bush, and whom the Republicans continue to favor in battles over revenue for needed programs.

That's not all the GOP resisters want in return for making a deal to extend payroll tax and extend jobless benefits. They also are demanding a retreat from a new and long-sought clean air rule which finally would require utilities and major power users to filter out mercury, lead and soot and from their air pollution plumes from boilers and incinerators. They want a symbolic revival of the Keystone XL oil pipeline from Canada, never mind that it was just temporarily deferred last month pending a completed environmental assessment. And they gratuitously want to force jobless people in diploma equivalency programs to be routinely tested for drugs as a condition for jobless benefits.

None of these latter demands have anything to do with the need to extend the payroll tax cut, and the question of how to pay for it. They are simply extraneous issues intended to prolong debate and camouflage their resistance to an extension of the payroll tax cut, which many Republicans continue to oppose on the grounds that it cuts Social Security revenues.

Of course, it wouldn't reduce Social Security funding if Republicans would allow reasonable revenue offsets elsewhere. But this is where we were in December, when many middle-class taxpayers began venting their anger over Republican opposition to fairer tax-cut relief.