Wednesday, November 30, 2011

Predictable Change Of Heart

Ohio Senator Sherrod Brown and Senate Majority Leader Harry Reid are among the co-sponsors, all Democrats, of S1917, which includes a surcharge on millionaires with extension of the payroll tax cut and its extension to employers. Two days ago, The New York Times reported

Republicans — who have adamantly defended a renewal of the so-called Bush tax cuts, which also expire at the end of 2012 — have been lukewarm on extending the payroll tax holiday, arguing that it would not stimulate the economy. They are particularly displeased with the Senate proposal to pay for it: the bill calls for a 3.25 percent tax on gross income over $1 million for single filers and married couples filing jointly.

Liberals have been battering Republicans (see video of Rachel Maddow and Demos Distinguished Fellow Bob Herbert, below) because they have opposed continuation of the payroll tax cut, whether because of an animus to the middle class or a simple-minded opposition to anything supported by President Obama.

They should have taken the GOP's superficial opposition and considered themselves, and the American people, lucky.

Currently, at Obama's insistence, there is no loss to the Social Security trust fund because it receives a transfer equal to the hit it otherwise would have taken. I had planned for a few days to argue in this space that once there is a Repub-dominated government (de jure, rather than simply de facto, as at present), the cut would be temporarily extended or made permanent- but without reimbursement of the trust fund. Its reserves would decline as the Social Security trustees find that, without an increase in funding or a decrease in benefits, the Social Security trust fund no longer will be able to pay full benefits until 2037. Conservatives, having bled the trust fund, would declare that Social Security is in greater danger than ever and will not pay benefits unless it is seriously reformed- by privatization or some other scheme intended to eviscerate the system. Firedoglake's David Dayen explains

....if you don’t return the payroll tax to its full rate in 2012, it becomes harder to do so down the road (it’s always a “tax increase,” in the Obama parlance, when it goes away). Then the general fund is picking up some of the Social Security costs, and Social Security is contributing to the deficit in a roundabout way, making it easier to argue that it needs to be “fixed” (i.e., have the benefits cut) in some way.

"Why would they be against, Maddow asks Herbert, " something that would help the middle class?" Gee, might it have been a negotiating tactic? Alternatively, they have suddenly, inexplicably, changed their mind. As the smartest man in Washington (not to be confused with the man who believes he is the smartest person in the western world, Newt Gingrich)

Senate Republican Leader Mitch McConnell on Tuesday opened the door to extending the payroll tax holiday, just two days after his top deputy suggested Republicans would not support a renewal of the temporary cut.

"In all likelihood, we will agree to continue the current payroll tax relief for another year," McConnell said Tuesday.

And of course this agreement to consider what Republicans wanted all along comes with a price, all the higher after Democrats complained for weeks about GOP opposition. Dayen reports McConnell "vowed that Senate Republicans will come up with their own offset, and based on the offsets they have proposed in the past, expect it to be completely unacceptable, something on the order of drastically reducing near-term spending across the board. "

Note to Maddow et al.: the Pentagon budget will not be among that which Senate Republicans will demand be slashed. Digby argues

it appears the plan is to demand something odious in return to pay for it and then blame the Democrats for raising taxes when they refuse. (Sound familiar? It should, it worked beautifully last December. Look for them to hold up the Unemployment extension too, just for kicks. It's Christmas. They deserve a little fun.)

The idea that the GOP would demand something intolerable and then blame Democrats for raising taxes when they predictably refuse never had occurred to me. But then, it seems that the idea that top Republicans would end their opposition to this tax cut, portray themselves as tax-cutters, and take a major step toward their goal of ending Social Security as we know it never occurred to Maddow, Ed Schultz, and a whole passel of Democrats in Congress.

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