The Payroll Tax Cut Fight Returns

Posted: Feb 11, 2012 9:50 AM
Democrats got their wish, and it looks like they're going to get another fight over the temporary payroll tax cut. Expiration is nigh after a two-month deal back in December, and President Obama is claiming it's all the Republicans' fault.

Lawmakers agreed back in December, after much bickering, on a two-month extension, but that runs out at the end of this month. Obama said in his weekly radio and Internet address Saturday that Congress "needs to stop this middle-class tax hike from happening. Period. No drama. No delay."

Lawmakers have made halting progress on legislation to extend the tax cut. The bill also would renew jobless benefits for the long-term unemployed and prevent doctors from being whacked by a 27 percent cut in their Medicare payments, but the package costs $150 billion-plus and lawmakers will have to find a way to pay for it.

Democrats insisted on a two-month bill in December when House Republicans were pushing for a yearlong deal. Despite the insanity of a mere two-month extension, and against the wishes of payroll industry insiders, Democrats got their wish.

Policy analys Charles Blahous of the Hoover Institution notes the long list of "temporary" policies, and writes that the U.S. would do well to either enact them permanently or do away with them.

If the two sides could gloss over their long-term policy differences just long enough to agree to do away with the array of pseudo-temporary policies, both would benefit enormously. It would also become far easier for the two sides to negotiate adjustments to current policies going forward than it is in the current environment. The next president, whoever he is, could improve our fiscal practices enormously simply by leading a frontal, bipartisan assault on the various “temporary” tax and spending polices of the federal government.

The payroll tax fight is one entirely of Democrats' doing. They welcome anything where they can "agree" on tax cuts while shamelessly politicking and demagoguing the Republicans. President Obama and Congress would do well to do away with "temporary" policies and remove the uncertainty.