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The Republicans' tax cut trap

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Let's take just a moment to marvel at the elegant trap Republicans have sprung on the Democrats. If Democrats don't extend the Bush tax cuts, it's the "Democrats' tax hike!" It's a tax increase during a recession! Very bad. Very unpopular.

If Democrats do extend the Bush tax cuts, it's deficits as far as the eye can see! It's a 10-year budget outlook with $4 trillion more in debt! It's fiscal irresponsibility! Very bad. Very unpopular.

Heads Democrats lose, tails Republicans win.

The only way out of this, as I argued last night on the Rachel Maddow show, is for Democrats to turn the Bush tax cuts into the Democrats' tax cuts. Don't want to raise taxes during a recession? Get rid of the tax cuts for the rich, and maybe some of the tax cuts for the upper-middle class, and wipe out the payroll tax for a few years. Write the policy so the payroll tax phases back in as unemployment falls. That's much better stimulus, much more in the way of visible and immediate help, much better at helping the people who need help, and it keeps the Bush tax cuts from being added to the deficit forever and ever.

By Ezra Klein  |  August 4, 2010; 3:24 PM ET
Categories:  Taxes  
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Comments

"...and wipe out the payroll tax for a few years. Write the policy so the payroll tax phases back in as unemployment falls."

(psst...won't that shift the political focus and debate on to...S-o-c-i-a-l S-e-c-u-r-i-t-y?)

Posted by: tuber | August 4, 2010 3:36 PM | Report abuse

What is the cost of wiping out the payroll tax?

Posted by: lostinthemiddle | August 4, 2010 3:37 PM | Report abuse

The Democrats don't actually have to do anything and the tax cuts expire, so they can do anything that the Republicans feel bound in principle to reject, stall, filibuster, or otherwise try to reject.

Since it takes a bill by Congress to extend the tax cuts, the first thing that Kucinich will do is move to table the bill. That requires debate and a vote. If the vote passes then the bill exists, it just exists in some higher dimension we won't see until the end of the world.

Bothy parties know how to play the stall game. Let's see if Pelosi and Reid know how to play it so that the Republicans take all the blame.

THEN when the Republicans try to run on Tax Hike!, the Dems run on "The Party of no would rather vote no than get a tax break."

When the Bush Tax Cuts expire in toto because the R's can't compromise, the vast majority of voters won't even notice. They won't notice in November, either.

Posted by: ceflynline | August 4, 2010 4:09 PM | Report abuse

It's worth noting that the tax cuts are lapsing because (1) the Republican Party wanted to hide the cost of their policies, and (2) they cared more about maintaining tax cuts as a political issue than they did about advancing a policy they ostensibly prefer.

The GOP has been completely unserious about every single policy matter for at least a decade.

Posted by: eelvisberg | August 4, 2010 4:14 PM | Report abuse

"Let's take just a moment to marvel at the elegant trap Republicans have sprung on the Democrats. If Democrats don't extend the Bush tax cuts, it's the "Democrats' tax hike!" "

Let's marvel at the elegant trap the Republicans sprang on the Republicans.

There is still a great deal of work Congress needs to get done before 1 October, and it all involves spending. The R's would like to derail as much of this work as possible, and every time they will be justifying their log rolling on the grounds of, "It Increases the Deficit." Meanwhile they will be pushing welfare for the rich with the cry, "Tax Hike!" And they can't compromise. So they have to flip flop on deficits like a live flatfish on a hot plate.

Great campaign tactics, that.

And the Republicans did it to themselves by trying to be shifty and betting on a permanent Republican majority.

Mitch and John will need chiropractic manipulation about every six hours for the duration of this Congress to adjust for the whiplash they will get fighting deficits and fighting for tax cuts.

Posted by: ceflynline | August 4, 2010 4:16 PM | Report abuse

Get the ball out of your side of the court. How about:
I am all for the tax cuts but this time let the republicans come up with a way to pay for them.

Posted by: peskyspole | August 4, 2010 4:24 PM | Report abuse

isn't it just a tad hypocritical of you Ezra who (along with every other liberal democrat) have been screaming from the rooftops about how the BUSH Tax Cuts for the rich was so fiscally irresponsible (along with Medicare Part D) that it caused this whole huge mess we're in now. Every other word out of liberals mouths are "BUSH TAX CUTS" and now you want to re-name it when it suits you?

nice. Actually I was wrong. Its more than a little hypocritical. Its a lot.

Best to just let them go, explain them not as a tax hike but as a return to a time that was more fiscally responsible and let it be at that.

More people would respect you for being honest than SPINNING it like you are.

So much for being above the fray.

Posted by: visionbrkr | August 4, 2010 4:29 PM | Report abuse

Why not let all the BUSH tax cuts expire because they will explode the deficit, then introduce a bill for the OBAMA tax cuts and payroll tax wipe out/phase in to help the middle class climb out of the recession's aftermath? Win/Win.

Posted by: jgau4 | August 4, 2010 4:30 PM | Report abuse

You should check out Judd Gregg's comments this morning on MSNBC's The Daily Rundown. Either the man is very stupid or very disingenuous. And it's hard to believe, but he apparently is one of the best the Republican Senate has to offer.

Posted by: JamesCody | August 4, 2010 4:33 PM | Report abuse

If I thought the Republicans were smart enough to spring this trap, I'd be very proud.

But visionbrkr is right. The Democrats set out the trap and sprang it on their very own selves by pretending the Bush tax cuts were: 1. only for the rich, and 2. the cause of all this mess.

But while Republicans weren't smart enough to set this up, some of us at least figured out ahead of the Democrats where it was going to end and have been waiting around to hand them the petard with which to hoist themselves. :)

Posted by: bgmma50 | August 4, 2010 4:41 PM | Report abuse

The September trap is not the tax cuts but the PPACA employer mandates: already, some employers are cutting salaries in order to pay (what is for most) an increase from 50% to 100% of health insurance costs. While technically it is simply a burden shift, many employees are likely to perceive it as a true wage cut.

Posted by: rmgregory | August 4, 2010 4:48 PM | Report abuse

I think Ezra is right that its a lose-lose for Democrats, and I think that if the GOP were in power and were in the same exact situation, making the same exact choices, it'd be win-win. They'd be able to frame either outcome as good for them. They always win the framing war.

As for RMGREGORY and the employer mandates

Who, and how many are this mystical "some employers" you talk about? I assume "some" is a number between 1 and infinity, but can you narrow it down a bit?

And where are the numbers 50-100% coming from? What is the estimation technique and who did it?

Posted by: nylund | August 4, 2010 5:10 PM | Report abuse

Do nothing. Frame the return to pre-2001 tax rates the “Planned Bush-Republican Tax Increases.” If Republicans push for continuation of tax cuts, filibuster, while simultaneously calling them traitors to their former president and his legislative agenda they previously voted to support. One can let up to 18 Dem senators support Republican tax cut continuation proposal and still win under Cloture rule. Then introduce new legislation to relieve the middle class of the burden imposed on them by the Bush-Republican tax increase and let the
Republicans confront the problem of voting down a tax cut.

Posted by: tom76 | August 4, 2010 5:26 PM | Report abuse

""...and wipe out the payroll tax for a few years. Write the policy so the payroll tax phases back in as unemployment falls."

(psst...won't that shift the political focus and debate on to...S-o-c-i-a-l S-e-c-u-r-i-t-y?)"

There's a risk of that.

Perhaps the Democrats could make one or two of the federal income tax brackets negative (say 10% and 15% become a single -10% bracket). It wouldn't be precisely the same but it would accomplish largely the same goal.

Posted by: justin84 | August 4, 2010 5:31 PM | Report abuse

Only the polling that I've seen shows that a large majority favor letting Bush's tax cuts for the wealthy to go away. And a third (roughly) want all of the Bush tax cuts to go away.

Something like a third want all of the Bush tax cuts to be permanent, but that is the same third that think Obama was born in Mordor. The D's have no reason to go after their vote; they'll never, ever, ever get it.

If the D's were smart they'd setup some half measure that the R's were sure to go against and when the R's filibuster it the D's will be able to say, "Well, we would have extended some of the tax cuts, but the Republicans 'Just said NO.'"

Posted by: nisleib | August 4, 2010 5:34 PM | Report abuse

I think it's kind of funny how Ezra and other liberals keep saying raise taxes on the rich (which is what you're doing by not extending the Bush tax cuts) and that will show how fiscally responsible we are. If you only raise taxes on the so called rich (those making over $250,000 per year, which is barely enough to scrape by on in NY City) that will be a tiny drop in the bucket filled with a sea of red ink. On top of that the extra money you'd get would be much smaller than the Democrats claim because the rich know how to hide their money from the tax man in very ingenious ways. See John Kerry's yacht. All that so the Democrats can feel good about sticking it to the most productive members of society. Only in America.

Posted by: RobT1 | August 4, 2010 5:34 PM | Report abuse

Your idea to take away a tax on most people is better. Also why not Dems say GOP just watching out for the rich, as usual, and complaining about increases because only for the rich?
Also call the expiration a Huge Deficit CUT.
Bush's tax cuts a 10-year Deficit Booster

Posted by: dcunning1 | August 4, 2010 5:45 PM | Report abuse

"Perhaps the Democrats could make one or two of the federal income tax brackets negative (say 10% and 15% become a single -10% bracket). It wouldn't be precisely the same but it would accomplish largely the same goal."

Nice in theory but that idea probably went dormant in the 90's. Remember 'tax cuts for tax PAYERS'? Besides, the EIC, something even Reagan supported way back when, gets there to a certain extent.

Posted by: tuber | August 4, 2010 5:49 PM | Report abuse

nisleib,

I'd bet if you took a poll you could get pretty close to 100% of people saying they wanted to tax "someone other than themselves".

Again Ezra its not a trap if you set it yourself. Its just stupidity on Dems part.

Posted by: visionbrkr | August 4, 2010 6:00 PM | Report abuse

"Also call the expiration a Huge Deficit CUT.
Bush's tax cuts a 10-year Deficit Booster"

President Obama campaigned on not increasing taxes for families making less than $250k (whatever happened to Joe the Plumber). In fact, Obama said he would lower taxes for families making less than $250k. He can't allow the Bush tax cuts for these families to expire, at least not until after the 2012 election.

Posted by: tuber | August 4, 2010 6:16 PM | Report abuse

peskypole, jaygau4, tom76 and dcunning1,


Thanks to all of you. I never thought I'd get a real good feeling for how it would have been on Journolist. now i know.

Posted by: visionbrkr | August 4, 2010 7:35 PM | Report abuse

^
|
|


ROTFLMAO!

Posted by: bgmma50 | August 4, 2010 9:56 PM | Report abuse

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