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.