Democrats learned a valuable lesson in December, during the payroll-tax fight that was going their way: when Republicans are losing, their negotiating posture can and will change.
Indeed, during that initial round of the dispute, GOP negotiators quickly lost all leverage because Democrats simply didn't believe Republicans were prepared to shoot the proverbial hostage. As of this afternoon, the same dynamic appears to have played out once more.
We talked earlier about the looming deadline for the payroll tax break, and the poor odds of success unless the GOP became more flexible. In a major surprise, Republicans not only changed course, they abandoned one of their central demands.
House Republicans said Monday that they would offer a measure to extend the current payroll tax cut for the rest of the year, dropping a previous demand that the tax break be offset.
The move marks a sharp turnaround for GOP leaders, who just last week were maintaining that the payroll tax holiday for 160 million Americans would have to be offset. But after taking a political pounding in December, House Republicans are adopting a new strategy.
This is, of course, the approach policymakers should have taken from the beginning. Instead of debating how best to pay for the tax break, the correct answer was obvious all along: stop trying to pay for it. Republicans were never going to agree to a millionaires' surtax; Democrats were never going to agree to total capitulation; so forgetting about offsets was always the path of least resistance.
Economic growth is more important than the deficit anyway, and paying for the tax break necessarily meant finding a way to take money out of the economy -- which would undermine the point of the tax break in the first place.
GOP officials said all along -- at least up until a few hours ago -- this approach would be wholly unacceptable. What changed their minds? Details are still coming together, but I suspect the prospect of being blamed for a middle-class tax increase in an election year may have had something to do with it.
For proponents of the payroll break policy, this is encouraging, but they might want to keep their champagne on ice. Today's surrender from Republican leaders represents progress, and there's obvious reason for optimism, but there are a couple of caveats to keep in mind.
For one thing, Republicans are retreating on the payroll fight, but let's not forget, the larger package is a broader piece of legislation that also included an extension of emergency unemployment benefits and the Medicare "doc fix" on physician reimbursements. As part of this new approach, GOP leaders are separating the tax break from the rest of the bill, effectively saying, "We're caving on the payroll tax, but we'll keep fighting on jobless aid and Medicare reimbursements."
The other provisions matter, and by separating the biggest piece of the puzzle, Dems will have less leverage when negotiating on the other measures.
What's more, the new Republican offer will reportedly be brought to the House floor as early as this week, but success is far from assured, especially if the bill is on the suspension calendar, which would necessitate a two-thirds majority to pass.
Rank-and-file GOP House members are already on record against the very idea of a middle-class tax break, and we've seen repeatedly over the course of the last year that Republican leaders in the chamber aren't exactly in a position to bark orders at their caucus -- at least if they expect those orders to be followed.
House Democrats will likely see today's announcement as a surrender and be inclined to accept the offer. But will the combination of House Dems and House GOP leaders be enough to get this across the finish line? Time will tell.
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Nice guys are usually shocked by how cowardly bullies turn out to be when you finally stand up to them.
so true, meme. Let's stand up more often, then we'll become less shocked..
Toe to toe they stood, each refusing to budge. The hours ticked by,days creeped along yet there they stood daring the other to make a move. Then along came the janitor to sweep up. He gazed upon the spectacle and inquired "Are you so vain that you can't stop looking in the mirror?"
Economic growth is more important the deficit anyway, and paying for the tax break necessarily meant finding a way to take money out of the economy -- which would undermine the point of the tax break in the first place.
Well, it depends.
Generally, relatively modest tax increases on millionaires and billionaires does not take money out of the economy. To the extent that we must tax, we should attempt to tax incomes that are sitting idle. By taxing idle funds of people who have more money than they know what to do with, we are actually putting money into the economy, not vice versa (and making the tax structure more fair).
Yes! Why don't they get that? Are they so devoted to being anti-Everything Democrat that they can't recognize the obvious? These folks are bad for America.
In third grade I learned the lesson it has taken Democrats a lifetime to grasp: Popping the playground bully a fast one in the nose puts an end to all of the terror the bully wreaked on me.
Beyond this immediate battle, someone should hand Congressional Republicans - especially the Tea Partiers from the Midwest and South - The New York Times masterpiece that reveals how much more Red State constituents receive from Washington than they pay out in taxes. Clearly, the safety net no longer is just for poor, inner-city minorities; GOP-voting suburban and rural white people are the principal recipients of the government's largess.
My favorite anecdote in the piece was the first one, about the suburban Minnesota dad who printed free Tea Party tee-shirts for a friend and called for everyone to be self-sufficient - but who gets government programs that equal roughly half his income value in Medicare for his parents, special aid for his kids and the earned income tax credit.
That is what fascinates me! The same people who are so "anti-government" are the same ones who are receiving government benefits.
See Ashley, what those "anti-government" types don't want is for "other people" (wink, wink) to get a "FREE" ride on their dime.....
I would really appreciate a link to that article - thanks :)
Maybe the Democrats need to support cuts to the Red States?
Farm Subsidies comes to mind.
http://www.nytimes.com/2012/02/12/us/even-critics-of-safety-net-increasingly-depend-on-it.html?_r=1
A sadly fascinating read. Thanks, Meg :)
What we are witness to is the power of strategy. Using fear and superstition the few get the many to gather together to fight themselves. Bush proved that Americans will surrender freedom and liberty for security even when the enemy is all smoke and mirrors. That has become standard policy now for politicians.
"but success is far from assured"- I think the baggers are going to stage a revolt over this one . Poor inept Boehner . If he wasn't such a prick I'd feel sorry for him .
But he is a prick, so don;t worry about him.
Hilarious Steve. Tell me you are doing this on purpose. From your earlier post titled "What drives the debt":
In case it's not obvious, that orange section shows the extent to which Bush tax cuts are responsible for the deficit and the debt.
And now this post about the payroll tax cut:
Instead of debating how best to pay for the tax break, the correct answer was obvious all along: stop trying to pay for it.
Classic. So I guess the only difference between the two defict adding tax cuts is.... whose watch it is under. I am laughing to the point of tears. Please tell me you see the irony and hypocrisy.
Keynsian ants run up government surpluses in the prosperous summers so they have something to spend and eat in the recessionary winters. "Supply-side" grasshoppers run deficits to "starve the beast" all the time - as long as a Republican is President!
Skip, unless it shows up in a skit on SNL, I'm becoming more and more convinced that our friends on the left can not see any irony or hypocrisy in their views, positions, or arguments. I think the "stop trying to pay for it" line is very sad as well.
Mr. Benen, and the rest of us, see your hypocrisy quite sell, Skip. The fact that you are dishonestly conflating a tiny drop of relief for the middle class with the massive gifts to ultra-wealthy fat cats is not lost on anybody here.
Also, your dishonesty in pretending that Mr. Benen is the one concerned about deficits, rather than the lying right-wingers who want to keep pouring money on the ultra-wealthy, is also lost on nobody.
Perhaps the difference is that the Bush tax cuts primarily target upper incomes, while the payroll tax targets lower incomes? Perhaps it's that, because of that difference, the payroll tax cut has more impact on economic growth than the Bush tax cuts? Perhaps the post about the deficit wasn't necessarily calling for a balanced budget, so much as setting the record straight about what causes deficits? Perhaps together these two points suggest that eliminating the Bush tax cuts could have both more impact on the deficit and less drag on the economy than elminating the payroll tax cut would?
...nah, it's easier just to blame hypocrisy and partisanship. Reading comprehension is hard.
So, it's not hypocritical to pass massive tax cuts without insisting they be "paid for" when a Republican is president, but then insisting all tax cuts be paid for when a Democrat is president, but it IS hypocritical to POINT OUT that hypocrisy. Got it!
Jurgan, the payroll tax cuts are Bush tax cuts. Reading comprehension is not all that hard.
Steve, you have a point. The only difference is there is now more focus on debt, more debt, and, as you point out, difference in party/power. It is sort of like when a family is doing well economically they may plan a vacation without a second thought. If money/budget is tight, they have to find a way to offset the cost of the vacation. Surely, you see some plausibility here. But, you have a point.
Well, obviously it DOES matter "who's watch it's under", since this entire debacle began under gw's "watch".
Really tired of trying to get it through thick right wing skulls that the bush tax cuts THAT ARE STILL IN PLACE added at least three trillion dollars to the national debt. When he took office, budget projections showed a six trillion dollar surplus, enough to pay off the then-pending six trillion dollar national debt.
Instead, by the time that awol idiot left office, the national debt had ballooned to over ten trillion dollars. Yet republicans refuse to take responsibility for having put the country in the hole it's in now?
Why on earth should ANYBODY listen to what republicans have to say about the budget at this point in time? They possess NO CREDIBILITY in this matter, and no amount of whining will change that.
Good points all. And my only point really was that both tax cuts it seems now, are to be unfunded. Yes the Bush tax cuts did add much more to the debt, but the payroll tax cut will too. I did not say that one was better than the other (BTW I do think the payroll tax cut is a good thing Shade and Jurgan), just the fact they are both not paid for. And the payroll tax cut is coming out of Social Security which is more benificial to the lower incomes. I do not see how pointing out that fact that they are unfunded makes me a right winger (I am not - usually vote 3rd party). And keepintime I do not care who adds Trillions to the national debt - Bush or Obama - but the fact is that the debt is now pushing SIXTEEN Trillion. But I am sure you have no problem with the past 3 years of deficit spending adding to the debt :). The massive debt may have started with Bush, but it is still going up at a very fast pace.
Agreed, but you're wrong. Most certainly I AM concerned about the nation's debt as my children, and quite possibly their children as well, will be living with it. Yes, I'm mad as hell that NONE of this was necessary. Original GREED made it all possible, and the past three years' worth of deficit spending is what it has taken to keep the country from falling completely apart. How short some memories are.
But no, I don't expect you to acknowledge any of that.
Keepintime, why do you think I am a defender of Bush? My memory is just fine - and yes Greed and bad tax policy did damage our economy. But I differ in your argument that adding 6 TRILLION in the past 3 years to the 10 TRILLION from the Bush era will help. Yes it may help in the short term but as you mentioned your children and their children will be paying for it and that will diminish their economic well being. I would rather the current generation take some of the hit for this massive overspending and adding over a trillion every year is not going to do it.
Yeah. We differ. And, admittedly, I don't pretend to have the definitive answer. Look, Skip, I'm not one who usually adds links to articles for others to read. This one, however, is compelling. It's courtesy of Meg Fox, #3.5 above, and it's worth the time:
Even Critics of Safety Net Increasingly Depend on It
http://www.nytimes.com/2012/02/12/us/even-critics-of-safety-net-increasingly-depend-on-it.html?_r=1
The correct response from House and Senate Democrats and the White House should be: "We'll accept this approach, but not separately -- only in the context of also extending unemployment insurance, the doc fix, TANF and other provisions. So, let's get that done!"
How do Republicans vote against the payroll tax cut and then go back to their constituents? They can't because it would hurt them during the elections, particularly if they intend to campaign on extending the Bush tax cuts. If Republican House members vote against the payroll tax cut, they are handing the Dems the issue on a platter.
The question is how do they keep getting voted into office? That's what baffles me... :)
There are a lot of voters, including some of my relatives, that only see the President's race and hear nothing. They are deaf and Republicans are more than happy to take advantage of fear.
So, acceot the offing of 3-5 million from the UI roles?!!?
That's nothing to agree to.
Next capitulation: contraception. Then unemployment benefits.
By election time, we'll have Obama's jobs package.
We already know the GOP jobs package. The GOP -- that party that wants 'smaller government' will actually be the expansion party of Government as they will require hiring nationalwide 'Uterus Police' if they had their way!! They just keep leepfrogging themselves in the corner on the right!
'Uterus Police' - too funny. But don't forget Santorum's 'Contraceptive Cops.' More great jobs from the party that brought you Dogs on the Roof and Moon Colonies. And Ron Paul!
Vagina vigilantes.
But this isn't a sure thing for the Republicans yet.
They still have the tea partiers who could balk. I would SO love to see this pass with all of the Democrats and just enough Republicans to get it through. Then let the tea partiers go back for re-election.
I agree; all or nothing.
The Republicans are trying to murder the unemployed, of which I am one.
And I'm not "going gently into that good night."
guess closer to election time more these out of touch radical right/wrong wing will start to come around and try to take credit. but sorry 3 years of doing nothing will trump you every time.
your lies, fear and just plane old Bravo Sierra will not work on the majority of Americans.
Back pedal or not, we must not forget, this is and election year! If you do not like the way the House and Senate are being run, get involved. The TEA party realized that real power begins at the local and state level and control of who runs for office in what district and who controls monies. States with majority rules have made great inroads to this maneuver. More than a dozen states, run by the TEA-GOP-Republican party, have enacted new voting restrictions across the nation. We must remember the TEA-GOP-Republican membership and leaders are into themselves first. We can't cut and slash our way into growth, just like less taxes will grow jobs. Both are pure falseness on steroids. Let's vote to control our future!
Wasn't there an animal known as a moderate republican at one time? There must be at least one out there. How about speaking up! If not, stop calling yourselves republican and just change the name to wealthy evangelical whack job right wing elitist tea party obstructionist and be done with it.
That's too long to fit on a business card....
Sometimes called "Eisenhower Republicans.
I know of one -- her name is Rachel Maddow.
The Republicans backed off on this because they saw that being against the payroll tax cut would hurt them more than it would hurt Obama. Being against something simply because Obama favors it is only part of the picture. The big danger is the willingness of Republicans to do deliberately do things that hurt the economy because they believe that will help defeat Obama. They changed their mind on this issue when they finally understood that it was hurting them more than it was going to hurt Obama.
This gives me hope that a lot of voters are starting to decide that they do not want to go where the far right wants to take them.
I don't support the extension of the payroll tax holiday. Its a cut into each workers portion of the social security trust fund. Its like cutting your 401K contributions today so that you have more spendable income today at the expense of a bigger 401K balance 40 years from now. Unfortunately supporting a payroll tax holiday is fiscally unsound, but politically popular.
I agree. The Dems and the Repugs have really pulled the wool over the eyes of the masses on this one. The "payroll tax break", as they've so tantalizingly named it, is nothing more than a temporary reduction in the mandatory employee contribution to one's own Social Security account. That's like saying, "Here, take this $5 bill out of your wallet and put it in your pocket. Now, look! You've got $5 to spend!"
That's what makes all the previous conversation about "offsets" so laughable. What the retards on the right are really talking about is something to replace the missing funds that they would typically be looting from the Social Security Trust Fund. That's been their favorite 'free money' source for the last 25 years!
Rachel and the rest of the MSM are also guilty for going along with this chicanery and promoting it like it's going to help working class Americans. In fact, all it means is that you'll end up with LESS money in your Social Security account when you need it. Call it what it is. It's spending today instead of saving for a rainy day!