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Once the President floated the idea of extending the payroll tax cut, and the idea of adding an employer-side tax cut to that, us blogger types analyzed and debated the merits of the action. I talked to a bunch of economists about whether the employer-side tax cut would create jobs or do little. People like David Leonhardt advocated for a targeted tax cut that only kicked in if hiring increased. Question: isn’t that the same as the job hiring tax cut?
But it’s all academic now, because after some initial nods in that direction, Republicans aren’t biting.
“Well they’ve tried this once, and it hasn’t seemed to be working,” said Rep. Jeb Hensarling (R-TX).
His Senate counterpart, Lamar Alexander (R-TN) echoed this view.
“We don’t need short-term gestures, we need long-term strategies that build into our system simpler taxes, lower taxes, fewer mandates, lower costs, more certainty, any changes in the debt structure of tax reform ought to come out of the Vice President’s talks or part of a major tax reform,” Alexander said. “If short-term government programs work, we wouldn’t have 9% unemployment today because the government has tried it. So we’ve proved that doesn’t work, unforutnately.”
The Washington Post got a GOP aide to say that the concept of pairing short-term stimulus with long-term deficit reduction is “pure, unadulterated nonsense.”
So there you have it. We’ve come to a point where Republicans are rejecting tax cuts – tax cuts! – because the White House supports them and thinks they would help the economy. Maybe this is good for the President politically. He can expose Republicans as interested in crashing the economy as a political end in itself. But that’s a small comfort for the economy. And furthermore, the President should actually feel free to advocate for things that are actually worth doing at this point. As long as Republicans are going to knee-jerk oppose, they ought to knee-jerk oppose something like direct job creation, something that has a chance of working.
At the very least, this is a moment to insist on some stimulus in any deal, and draw some bright lines. Instead, we’re likely to get deficit caps and triggers, and Medicaid cuts.
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Jane is on Cenk’s right now!!
“lower taxes, fewer mandates, simpler taxes” “less uncertainty” – OMG. Alexander and Hensarling demonstrate once again why they are in the dumb-as-a-box-of-rocks caucus.
Ecnomy’s up – Lower taxes! Fewer mandates!
Economy’s down – Lower taxes! Fewer mandates! Uncertainty!
It hasn’t worked in ten years. Or EVER!!!
When will they shut the f**k up?
And everyone in the blogoshpere is wondering . . . When will Obama realize that the Republicans just want the President to fail. The Republicans will block everything that might help the economy recover.
Well, IMHO, that particular tax cut would have done nothing to create jobs – and was another indirect assault on SS funding. It well deserves to die.
This stance is entirely consistent with the Republicans’ stated goal of putting more certainty into the fiscal dealings of this country. Transient, short-term gimmicks like this only serve to drive up deficits while not addressing the long-term structural issues facing our economy. They look good at election time, but are otherwise dangerous.
This is simply like moving balances from one credit card to another – there may be a short term easing of the financial stress, but the longer-term impact is nil and may actually damage the economy more.
We need meaningful tax reform and simplification to get rid of the financial incentives to game the system, reduce loopholes, and spread the tax burden among all parties. That, combined with respectful levels of cost-cutting, will drive down the deficit and improve our economy.
I don’t think this tax cut will do much. Perhaps something is better than nothing but a thimble of water for quenching a desert thirst is not much.
So all the debate on a previous post is for naught. But one thing I agree here as DD said, we need to insist on some stimulus in any deal. For me, it would likely be a no deal unless the stimulus offset and then some whatever we give up.
Can we start using CPI formulas that aren’t ex-food and ex-fuel so those of us on Social Security can get a fucking COLA?
“The Washington Post got a GOP aide to say that the concept of pairing short-term stimulus with long-term deficit reduction is “pure, unadulterated nonsense.” – David Dayen
“And a Senate Republican aide familiar with the Biden talks called the idea that Republicans might be willing to pair it (the payroll tax holiday) with tax increases ‘pure, unadulterated nonsense.’” – the actual quote from the Washington Post
I generally like David’s stuff and while I realize that many on here are utterly convinced that the two paragraphs above are the same, they are not (and I say this as someone who favors targeted additional stimulus!).
One school of economic thought equates tax increases with long-term deficit reduction and they are championed by many distinguished economists including some Nobel Prize winners (Paul Krugman, for example). Another school of thought sees tax increases as damaging to business, productivity and ultimately GDP and debt service and is endorsed by distinguished economists including some Nobel Prize winners (Robert Lucas, for example). Since thoughtful, intelligent, experts in this field disagree, why not just quote things accurately?
Someone down in DC oughta give Barry a copy of Irving Fisher’s 1933 Econometrica piece on debt-deflation theory.
Your dreaming. The Republicans will hold out for the best possible tax cut deal. They might get BOTH Medicare cuts and elimination of the Death Tax in exchange for Obama’s Payroll tax holiday. Watch and learn.
I do not want anymore Payroll Tax Reductions. This takes money from our Social security and Medicare programs.
I thought they were going broke? This is actually the first shot across the bough to get rid of those pesky FICA taxes. The CORPORATIONS are wanting this to happen.
I cannot believe Republicans are saving us on this issue.
Fixed. Kewl how a few months of miniscule cuts for TLP are clearly an abject failure, yet decades of massive cuts for the MOTUs only need to be made bigger in order to work, eh?