Dems Warn GOP: Don’t Strangle Recovery By Screwing With Payroll Tax

[ProSense]

Dems Warn GOP: Don’t Strangle Recovery By Screwing With Payroll Tax

Brian Beutler

Top Democrats pulled a little stunt Friday morning, when they tried to upend the House’s pro forma session to confer about and debate the payroll tax cut.

But in their remarks to the press afterward, they parlayed today’s positive jobs figures into a serious political warning to the GOP: Don’t threaten the recovery by playing games with the economy. In essence, today’s positive economic news raised the stakes of the payroll tax cut fight — if Republicans can’t get their act together and the tax cut lapses, it will muffle the recovery just as it’s finally starting to turn economist’s heads.

<...>

Republican rank and file members are still steamed that House GOP leaders caved and passed a temporary payroll tax cut extension. But it’s unclear whether they’ll allow that anger to drive their party toward brinkmanship over a full year extension of the payroll tax cut, or whether they’ll accede to political reality and allow the payroll tax cut to be renewed in February without a huge fight over extraneous policy riders, and if or how to pay for it. Dems put them on notice today that if they muck this up, they’ll be held accountable for the economic consequences.

“The work was not completed last year,” said House Minority Leader Nancy Pelosi. “It was not completed last year because…many of even the conferees, in addition to the members of the Republican caucus, did not support a payroll tax cut for 160 million Americans…. And then they used the excuse that it wasn’t long enough. I told some of you it was like yogi berra talking about a restaurant: ‘I don’t like the food there, it isn’t any good, and besides the portions are too small.’”

http://tpmdc.talkingpointsmemo.com/2012/01/dems-warn-gop-dont-strangle-recovery-by-screwing-with-the-payroll-tax.php?ref=fpb

I love Nancy Pelosi!

[SixthSense]

1. whether we recover or not

has nothing to do with the minutae of tax policy

We have ceased to be a nation of laws thanks to both parties sacrificing the long-term well being of the nation for short-term political expediency. As a result no one knows what to plan for as the rules change with every shift of the political winds, and thus no one can plan past the next gust with any level of confidence at all.

Moreover the rules being different for different people gives the influential a business advantage against which their smaller competitors cannot survive. If your large competitor can lie about its financial position, then use that lie to obtain financing it would not otherwise be able to get, which is then used to fund a price war to drive the smaller competitors out of business, and no one in the government steps up to enforce the law, the final situation becomes thus: you are either "too big to fail" or "too small to succeed".

The US economic engine has always been driven by small business. Always. It has never been otherwise, ever. But small business can't compete when they have to adhere to rules and their large competitors don't. So it's no surprise that many small businesses fold and many more are never started at all.


let me propose a slogan for how to think about this economic crisis:

"It's the corruption, stupid!"

[ProSense]

2. Wrong

"whether we recover or not has nothing to do with the minutae of tax policy"

...it has something to do with it, as does every drop of stimulus.

"We have ceased to be a nation of laws thanks to both parties sacrificing the long-term well being of the nation for short-term political expediency. As a result no one knows what to plan for as the rules change with every shift of the political winds, and thus no one can plan past the next gust with any level of confidence at all."

Wow, talk about getting stuff off your chest. What does any of that have to do with Pelosi warning Republicans?

[SixthSense]

3. it's like arguing about the color of the paint

on the Titanic

[ProSense]

5. Hey

"it's like arguing about the color of the paint on the Titanic"

...look on the bright side, people are being rescued.

http://www.democraticunderground.com/1002128289

Sure, it'll take time to rescue everyone and for those who are rescued to find normalcy, but every attempt to rescue people helps.

[girl gone mad]

4. SixthSense is right.

The tax holiday and any additional stimulus programs are only band-aid solutions. Until we address the deep structural problems within our economy, money will continue to accumulate at the top of the pyramid. The Payroll tax cut provides relief, until the rentier class jacks up prices to soak up this new money.

[ProSense]

6. Well,

"The tax holiday and any additional stimulus programs are only band-aid solutions. Until we address the deep structural problems within our economy, money will continue to accumulate at the top of the pyramid. The Payroll tax cut provides relief, until the rentier class jacks up prices to soak up this new money."

...isn't it good that the "band-aid solutions" are helping to improve things slowly until a huge "structural" shift happens?

I mean, Pelosi is attempting to stop the GOP from killing a stimulus. Isn't that a good thing?

[SixthSense]

7. here's the problem

The necessary structural shift is not happening at all. If anything it's going in the wrong direction.

If you believe otherwise, explain to me why Jon Corzine is walking free and MF Global's customers are still missing a collective $900 million from what were the functional equivalent of bank accounts and why Louis Freeh is stonewalling the CFTC and withholding documents that would help to trace where the money went.

The ability of elites like Corzine to steal massive amounts of money without consequence is the problem. No one else can do normal business under those conditions. Were Corzine instead Jon Q. Banker, CEO of Podunk Bank, and $1 million was missing, Jon Q. Banker would have been arrested by the FBI the moment the bank went under with money not accounted for. But when it's an elite actor like Corzine, a thousand times that figure gets disappeared and nothing happens.

Do you understand that we're at the point where it is no longer safe to keep money in a bank account or a retirement account?

[ProSense]

8. Well,

"The necessary structural shift is not happening at all. If anything it's going in the wrong direction."

...here's what I don't get: Should there be no additional stimulus based on that premise?

The OP doesn't present the tax cuts as the solution to entrenched economic problems. It's simply a report about an interaction between Pelosi and Repbublicans about a single initiative with stimulative benefits.

[SixthSense]

10. the quest to avoid making the necessary structural changes has taken us to Bizarro Land

Are Capitol Hill Democrats seriously staking a claim on who can be the most stimulative tax cutter? This is practically the same policy as the Bush tax rebate a few years ago. That was a total fail.

We certainly aren't going to get anywhere trying to out-Republican the Republicans, and especially not promoting policies that are proven failures.

If Nancy truly wants to help fix the economy in a meaningful way, she should crack open her Rolodex, look up Corzine's number, summon him to her office and demand to know WTF happened to the money. The uncertainty introduced into the economy by the MF Global theft of customer segregated funds has a far greater negative impact on the economy than minimal tax-cutting can have a positive effect (that is, if the latter has a net positive effect at all).

How does anybody do business under these conditions? The MF Global situation is destroying the futures markets which have been a predicate for modern economic prosperity since the days of the South Seas Trading Company! These are foundational elements of the economy that are being destroyed with a wrecking ball - adding a 2x4" support beam on one of the upper floors is not going to prevent the structure from toppling over!

[RC]

11. Correct. We as a nation thrive on diddling with the symptoms to fix things.

The payroll tax cut is a case in point. Let it expire. Let the bu$h tax cuts expire. Change our tax code to punish, instead of rewarding companies for outsourcing our Living-Wage-Jobs. Without Living-Wage-Jobs there can be no recovery worthy of the name. A jobless recovery is a lie, there is no such thing. We need real jobs. Living-Wage-Jobs, not just jobs. We have jobs, all kinds of jobs. It is the lack of Living-Wage-Jobs that is the problem.
Instead of rewarding the big money gamblers by bailing them out, pump that money into the economy by rebuilding our crumbling infrastructure. Another way to kick start the economy is to go to a Single Payer Health System, thereby not only allowing basic health care for everyone, but making health care cheaper for everyone. All we are seeing now are half measures and misdirection designed to thwart a real recovery.
Stopping our crimes against humanity, the one we call 'War against terrorism" and spend that money here, kick starting the economy instead.
But then what would expect from the multimillionaires we elect to rule us. Most have no clue how the rest of us live, as they have never experienced pay check to pay check, let alone a minimum wage pay check that doesn't stretch till the next one.

[CJCRANE]

9. One person's spending is another person's income.

That's how a market economy works. If working and middle class people have more disposable income then they will spend more and the economy will be more dynamic.

[ProgressiveEconomist]

12. Credible estimates of the effects

of not extending the payroll tax holiday and of not extending long-term unemployment compensation thru 2012:

Respected economists such as Mark Zandi, chief economic advisor to the 2008 McCain Presidential campaign, Nouriel Roubini of NYU, and the nonpartisan Congressional Budget Office all have estimated that not extending the 2 percent payroll tax holiday and long-term unemployment benefits thru 2012 would cost the economy big-time in employment and economic growth.

Using a simplified methodology, the Economic Policy Institute recently provided precise estimates that Zandi, Roubini, and the CBO would accept.

IMO, any informed discussion of current fiscal policy alternatives must include these numbers.

From http://web.epi-data.org/temp727/EPI-TCF_IssueBrief_311.pdf :

No payroll tax holiday would prevent $118 billion in tax relief for 160 million American workers, costing 0.8 percentage points in GDP growth and 972,000 jobs.

No extended unemployment insurance would eliminate $45 billion in spending for necessities by the unemployed, costing 0.4 percentage points in GDP growth and 528,000 jobs.