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GOP Stance on Payroll Tax, Unemployment Extension More About Perception and Blame-Gaming

John Boehner has now come out in “support” of a payroll tax cut extension, much as Mitch McConnell did yesterday. But like McConnell, Boehner appears to be adding a caveat for no reason other than to have a plausible excuse when the whole thing doesn’t pass:

“We’re going to continue to seek common ground on this issue,” Boehner told reporters after a House GOP conference meeting. “There’s no debate, though, on whether these extensions ought to be paid for. The president’s called for them to be paid for, Democrats here have called for them to be paid for and so if in fact we can find common ground on these extensions, I think you can take to the bank that they will be paid for.”

During the closed-door meeting, Boehner and House Majority Leader Eric Cantor (R-Va.) urged rank-and-file members to support the extension, saying it was necessary for a party that historically opposes tax increases, a leadership aide said.

Cantor told members that “taxes are a Republican issue and you aren’t a Republican if you want to raise taxes on struggling families to fund bigger government,” according to a source in the room.

The concern here is perception, pure and simple. If nobody is arguing about whether to pay for the tax cut then there’s no reason to bring it up. The Republicans just want to create some impossible pay-for that would hurt working people as much as the tax cut would help. Then, when Democrats say no, the GOP can blame them for “raising taxes on struggling families.” I explained this all this morning.

That appears to be the exact same gambit on extending unemployment insurance, which is actually more important to the greater economy. Because of the poorly designed structure of the payroll tax cut, some of the money goes to people with a low propensity to spend, which is just a waste in stimulus terms. By contrast, almost all the money delivered to struggling families in extended unemployment benefits will be spent. It has the highest bang for the buck in addition to being the right thing to do.

You could structure a better payroll tax cut, and get it out of the way of Social Security, by simply making it like the Making Work Pay refundable tax credit. That way it could be phased out at higher incomes, providing more money to those who need it and will use it. But that’s not likely to happen. At this rate, we will be lucky if it doesn’t get caught in a partisan blamestorm over the pay-for. And extending unemployment benefits, a more vital and pressing need for those eligible for it, is getting overshadowed in all of this. I’m not terribly optimistic about either, despite the self-serving GOP happy talk.

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David Dayen

David Dayen

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