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Senate Republicans Reject Their Own Payroll Tax Cut Bill

Command and Control (photo: Gage Skidmore/flickr)

The Senate got to their competing payroll tax cut plans late last night, and both the Democratic and Republican plans went down to defeat. But take a look at the roll calls, they tell a deeper story than just “both plans went down.”

The Democratic version, with a wider tax cut financed by a 3.2% surtax on millionaires, got 51 votes. In the upside-down world of the Senate, that means a defeat. But they held on to all the Democrats except Joe Manchin and Jon Tester. Bernie Sanders also voted against the bill, presumably because of the dangers to Social Security from extending that payroll tax cut. Susan Collins supported the bill, the only Republican to do so.

Now take a look at the roll call on the Republican proposal. Hastily put together late Wednesday, their proposal would cut the labor force in the federal government by 10%, continue a federal pay freeze, cut millionaires off of food stamps (no, really, it does that, so millionaires, your free ride is over!), and a few other things to pay for their simple extension of the current payroll tax cut and cut the deficit by $111 billion. They only got 20 votes for that. There was a total collapse on the Republican side. 26 Republicans voted against their party’s own bill (McCain did not vote). No Democrats joined them.

What does this mean? For one thing, Republicans badly mismanaged the sentiment in their caucus, authoring a bill that didn’t have majority support among them. Second, it appears that Republicans are perfectly willing to let the payroll tax cut expire. They got the go-ahead from Grover Norquist that this does not equal a tax increase. And plenty of them were willing to vote against an extension even when it also cuts the deficit.  [cont’d.]

The GOP vote en masse against a tax cut for the middle class financed by increased taxes on the wealthy was a great expression of priorities and will help Democrats next year. It doesn’t get us any closer to avoiding the fiscal drag, however, which comes at a still-fragile economic time, especially with Europe so shaky.

There are two approaches in the aftermath from Democrats. One was the bad cop tactic taken by the President, who railed against Senate Republicans (yes, he didn’t say the Senate, but Senate Republicans) for choosing “to raise taxes on nearly 160 million hardworking Americans because they refused to ask a few hundred thousand millionaires and billionaires to pay their fair share.” He said “it makes absolutely no sense to raise taxes on the middle class at a time when so many are still trying to get back on their feet.”

The other approach is what Harry Reid took. He still criticized Republicans for valuing millionaires over the middle class, and he highlighted that a majority of Republicans voted against their own bill, but he added, “I was encouraged to see one Republican join Democrats in asking millionaires to pay their fair share” and that “I hope Republicans will decide that the economic security of hard-working Americans is more important than protecting the wealthiest one percent.” This gives room for negotiation, although seeing those votes I’m not sure where that negotiation will begin, presumably by trying to corral the 20 Republicans who voted for their version of the bill and combining them with the majority of Democrats.

Meanwhile, Larry Mishel of the Economic Policy Institute has some good thoughts about how to argue for this measure. While Democrats have won a minor rhetorical battle on tax fairness and distribution, the larger war is still being played on Republican turf. A sample:

Presenting the measure as taxpayer protection advances a false narrative. For one thing, it further reinforces the misguided notion that economic policy is about whose tax cuts are better. This is a debate we don’t want to prolong, as its pursuit over the last several decades has been the recipe leading to a shrunken public sector. It also fails to articulate the real imperative behind it: to maintain consumer spending which supports jobs throughout the economy.

Indeed.

CommunityThe Bullpen

Senate Republicans Reject Their Own Payroll Tax Cut Bill

The Senate got to their competing payroll tax cut plans late last night, and both the Democratic and Republican plans went down to defeat. But take a look at the roll calls, they tell a deeper story than just “both plans went down.”

The Democratic version, with a wider tax cut financed by a 3.2% surtax on millionaires, got 51 votes. In the upside-down world of the Senate, that means a defeat. But they held on to all the Democrats except Joe Manchin and Jon Tester. Bernie Sanders also voted against the bill, presumably because of the dangers to Social Security from extending that payroll tax cut. Susan Collins supported the bill, the only Republican to do so.

Now take a look at the roll call on the Republican proposal. Hastily put together late Wednesday, their proposal would cut the labor force in the federal government by 10%, continue a federal pay freeze, cut millionaires off of food stamps (no, really, it does that, so millionaires, your free ride is over!), and a few other things to pay for their simple extension of the current payroll tax cut and cut the deficit by $111 billion. They only got 20 votes for that. There was a total collapse on the Republican side. 26 Republicans voted against their party’s own bill (McCain did not vote). No Democrats joined them.

What does this mean? For one thing, Republicans badly mismanaged the sentiment in their caucus, authoring a bill that didn’t have majority support among them. Second, it appears that Republicans are perfectly willing to let the payroll tax cut expire. They got the go-ahead from Grover Norquist that this does not equal a tax increase. And plenty of them were willing to vote against an extension even when it also cuts the deficit.

The GOP vote en masse against a tax cut for the middle class financed by increased taxes on the wealthy was a great expression of priorities and will help Democrats next year. It doesn’t get us any closer to avoiding the fiscal drag, however, which comes at a still-fragile economic time, especially with Europe so shaky.

There are two approaches in the aftermath from Democrats. One was the bad cop tactic taken by the President, who railed against Senate Republicans (yes, he didn’t say the Senate, but Senate Republicans) for choosing “to raise taxes on nearly 160 million hardworking Americans because they refused to ask a few hundred thousand millionaires and billionaires to pay their fair share.” He said “it makes absolutely no sense to raise taxes on the middle class at a time when so many are still trying to get back on their feet.”

The other approach is what Harry Reid took. He still criticized Republicans for valuing millionaires over the middle class, and he highlighted that a majority of Republicans voted against their own bill, but he added, “I was encouraged to see one Republican join Democrats in asking millionaires to pay their fair share” and that “I hope Republicans will decide that the economic security of hard-working Americans is more important than protecting the wealthiest one percent.” This gives room for negotiation, although seeing those votes I’m not sure where that negotiation will begin, presumably by trying to corral the 20 Republicans who voted for their version of the bill and combining them with the majority of Democrats.

Meanwhile, Larry Mishel of the Economic Policy Institute has some good thoughts about how to argue for this measure. While Democrats have won a minor rhetorical battle on tax fairness and distribution, the larger war is still being played on Republican turf. A sample:

Presenting the measure as taxpayer protection advances a false narrative. For one thing, it further reinforces the misguided notion that economic policy is about whose tax cuts are better. This is a debate we don’t want to prolong, as its pursuit over the last several decades has been the recipe leading to a shrunken public sector. It also fails to articulate the real imperative behind it: to maintain consumer spending which supports jobs throughout the economy.

Indeed.

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David Dayen

David Dayen