A Two-Month Payroll Tax Cut is Dumb, So Is How Congress Got There

House Republicans are right about one thing at least: Extending this year’s payroll tax cut for two months is ridiculous. The trouble is they are largely to blame for the very policy they are criticizing.

Congress got itself in this mess because a few dozen self-styled tea partiers have refused since last summer to helo build a consensus agreement on either short-term stimulus or deficit reduction. Recall that the $4 trillion budget deal tentatively reached in August  by House Speaker John Boehner (R-OH) and President Obama would have accomplished both goals. It would have, at least, until it was blown up by the same faction.

Over the past few months, this crowd was variously opposed a one-year extension of the payroll tax cut because A), they felt it was too temporary to have any real simulative effect B) they didn’t want to pay for it with a surtax on millionaires C) they didn’t want to pay for it with any tax increases on anybody D) they didn’t want to add to the deficit.

So after weeks of unproductive squabbling and with a deadline looming, Senate Democrats and Republicans agreed late last week to scale back the payroll tax holiday and pay for it with spending cuts and a new fee on mortgages. That got 89 votes in the Senate and, apparently, Boehner’s tacit agreement.  The Senate went home confident the issue was settled long enough for them to enjoy their egg nog.

Wrong. The House back-benchers now demand a one year extension of the payroll tax holiday. This would be the same proposal they have opposed for the past two months.  Of course, what they really want are other policy concessions, such as whatever spending cuts or regulatory changes they can force Democrats to accept as the price for the extension.   

In my naively ideal world, both parties would have worked together to improve Obama’s original, flawed  payroll tax proposal. This, of course, is laughable in today’s hyper partisan environment. 

Democrats are hardly blameless in this. Obama initially wanted to pay for the reduced payroll tax with a package of cats-and-dogs tax hikes. But Senate Majority Leader Harry Reid (D-NV) ditched that for the millionaire surtax, which was a nakedly political choice.

His intention was hardly intended to ease passage of an extension. Rather, it was a clever move to force the GOP into the trap of looking like they were raising taxes on workers to keep taxes low on the rich. Remarkably, Republicans seemed to have rushed into this snare with great enthusiasm.    

Oddly, the mavericky Rs have taken Braveheart as their role model. You remember the movie: Mel Gibson plays the Scotsman William Wallace who leads his countrymen in rebellion against the English.

But those lawmakers should keep in mind how the real story ends. Wallace was betrayed by some of his own countrymen, defeated at the critical Battle of Falkirk, and brought back to England, where he was convicted of high treason. He was then strangled, castrated, beheaded, and drawn and quartered (ouch).

Perhaps, the tea partiers should reconsider.