2:36 PM EST, December 1, 2011
Sorry, Virginia, there is no contractual sanity clause for those who serve in Congress.
Once again, the clock is ticking for Washington to fashion a compromise over legislation that would both stimulate the economy and provide tax relief to middle-class Americans. President Barack Obama's proposed payroll tax reduction sure would make a nice Christmas gift (or New Year's Eve surprise), but how many of us expect to take delivery within the next 30 days?
If recent history is any guide, probably not too many — even among the most optimistic young Virginias of the world. Faith in our elected leaders, let alone in red-suited, rotund gift-givers with flying reindeer, is in short supply this holiday season.
Not that the tax cut doesn't make perfect sense for all involved. Failing to approve one amounts to a tax increase for both employers and employees that would become effective on Jan. 1, something Republicans claim not to want. Experts project the U.S. economy will grow by an anemic 2 percent in 2012; taking hundreds — and in some cases, thousands — of dollars out of average workers' pockets next year will only make matters worse.
President Obama has suggested financing the tax cut extension by requiring those who earn more than $1 million annually to pay a surtax beginning in 2013. Republicans have rejected the surtax but endorsed a deficit-neutral approach with a peculiar mix of gimmicks and spending cuts, the most substantial of which throw federal employees under the bus.
Much of the GOP counter-proposal seems to have been fashioned for political effect — including a prohibition on millionaires and billionaires receiving food stamps (now known as the Supplemental Nutrition Assistance Program). We don't know what budget documents Republicans have been t studying, but when last we looked, Warren Buffett's SNAP card wasn't one of the bigger drivers of the nation's deficit.
To be charitable, it's good that Republicans have at least shown some interest in extending the payroll tax break. It's the kind of policy that they've endorsed in the past, but Mr. Obama's interest in it (as part of his jobs bill) initially cooled theirs.
Still, what's maddening about their counter-proposal is not simply that Republicans would hold the well-being of millionaires over all others but that they would do so under the guise that they are looking out for "job creators," as if the rich were chiefly responsible for growing the economy.
Here's a news flash: The wealthy don't drive the economy. Job creation depends on both investment and consumption. The payroll tax can stimulate both sides of that equation, but keeping down taxes for the rich has little bearing on either. If it did, the country would be in economic pig-heaven, as effective tax rates on the highest earners among us haven't been lower in 30 years.
While they may spend less individually than the Donald Trumps of the world, average households are better job creators because there are so many more of them. Inventing a better mousetrap (or even leveraging the buyout of the mousetrap company) is great, but you also need the people with money in their pockets to beat a path to your door.
Democrats need to do a better job of pointing out the obvious: Lowering tax rates for the rich only serves to make the rich richer. And if Republicans want to finance the payroll tax cut, they should not do it by taking money out of the pockets of those of us earning far less than seven digits — and that also goes for health and safety inspectors, veterans hospital nurses, cancer researchers, FBI agents, and the rest of the federal workforce.
Cut government waste, yes, but extending the freeze on federal wages for another three years will not lower the deficit in any meaningful way and could hurt a lot of honest, hardworking people for no good reason. Raising taxes and reducing spending on the government's big-ticket items like the military and entitlement programs is the only way to correct the nation's long-term budget imbalance.
There is room for compromise. Perhaps the size of the extension or of the proposed 3.25 percent surtax could be lowered. There is ample room in the federal budget for cuts in spending, too. But we've been down this road of negotiations several times this year, from supercommittee hearings to plain old leadership summits, and it never turns out well.
How will voters react when their taxes go up a week after Christmas as a result of congressional inaction? For many, the lost wages could spell the difference between buying a big-ticket item this season or not. For employers, it's likely to cost jobs. And all so Ebenezer Scrooge can be held harmless? We don't see much prospect for a happy ending in any of it.
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