This tax started just last year as part of the crappy deal to save the Bush tax cuts and blow another hole in our lousy deficit budget.
Now the Senate, and only the Senate, are voting on and discussing this issue. The Democratic proposal, which includes further payroll tax cuts and an unemployment extension, pays for the spending with a surtax on the wealthy. Republicans countered with a salary freeze on federal workers (acutally, a future freeze since the current freeze was part of an earlier deal) and personnel cuts by attrition. Neither proposal met the 60 votes minimum needed to move ahead in the Senate.
The Republicans aren't big supporters of this tax cut. It wasn't "paid for" with spending cuts (making it a kissing cousin to the Bush tax cuts, not that Republicans acknowledge that). It also was part of Obama's price for agreeing to extend the Bush tax cuts last December. If you're a politician who hates all things Obama, these tax cuts would be included. A lot of Republicans would like to see these tax cuts die quietly. In fact, 26 Republican senators voted against the Republican plan.
The Democrats, however, want to make hay over these cuts. They want to show that Republicans cling to their tax cuts, but won't raise a finger for Joe Sixpack's payroll tax cuts.
Republicans don't have a strong counter story to this... yet. They can say that it's bad for Social Security, which it is, among many other things. They can say that the Democrats just want to soak the rich and piled on even more spending, which is true, and not the best move by the Dems. But the Republicans aren't in a good place to defend the Bush tax cuts after this.
They should be scrambling to fix this narrative, but I'm not seeing it yet. The House isn't doing anything. They probably hope when Senate's competing bills fail, "it isn't the House's fault." I think the Senate will oblige them.
However, if the Senate does manage to negotiate a continuation of this tax cut and negotiates a way to pay for it, that would be a hugely unexpected breakthrough in partisan gridlock. It would open a major new dynamic. Suddenly, the House, with its rigid, no-compromise, take-no-prisoners talk, would look like the obstructionists they've been. And many politicians up for re-election this year would have to show what camp they're in -- compromise or no compromise.
I'm not a fan of continuing stimulus, this particular tax cut, or its continuation, but I am a fan of putting politicians in stark relief, and making them justify the positions they've taken. This tax cut isn't sacrosanct, and either are the Bush tax cuts. That is where the real conversation should start.
Update 12/2/11. Boehner is trying to write something that his House Republicans will pass. They don't like the tax, so Boehner is trying to sweeten it with extraneous Republican tidbits. However, what Republicans consider tempting enough are actually huge concessions that the Democrats would never make:
- "We'll give you this 2% tax cut extension if you give us the Keystone pipeline."
- "We'll give you $500 billion in 'revenue' if you give us continuation of all the Bush tax cuts."
Update 12/20/11.The Senate didn't manage a breakthrough, but managed to negotiate a reprieve for two months with solid bipartisan support (89-10). The House Republicans want to stick with their bill, and make the Senate accept it NOW. However, a minority of the House Republicans would rather vote for the Senate bill and take the reprieve. The Republican leadership, knowing they have wavering members, won't put the Senate bill up for a vote. The ball is in the House's court, and we'll see how stubborn the House Republicans are. This is the stark relief I hoped to see, though I'm looking forward to seeing it in the Senate too.
Update 12/22/11. McConnell is trying to close the gap. Currently the House Republicans are saying 'no deal unless it's negotiated before Jan. 1.' The Prez is saying 'two month extension, and we start negotiating on Jan.1.' McConnell can make them both partial winners--'two month extension, and negotiations start today.' I predict that is what will happen today or tomorrow, and McConnell will get the credit. The saga continues. (Eye roll on a national scale.)
Second Update 12/22/11. House Republicans give in and agree to a 2-month extension. Merry Christmas, good-bye Scrooge, and God bless us everyone.