Republicans Managed To Lose Tax Issue To Obama

 

**

                  REPUBLICANS MANAGED TO LOSE TAX  

                                 ISSUE TO OBAMA

                           By: Edward P.Shallow

In what has to be the blunder of the year, the Republicans managed to lose the tax issue to the Democrats and the Wall Street Journal has to be commended for their insightful article “The GOP’s Payroll Tax Fiasco of 12/21.  I quote in part.

The GOP leaders have somehow managed the remarkable feat of being blamed for opposing a one-year extension of a tax holiday that they are surely going to pass. This is no easy double play.

Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election year tax cutter, although he has spent most of his Presidency, promoting tax increases and he would hit the economy with one of the largest tax increases ever in 2013. This should be impossible.

House Republicans yesterday voted down the Senate’s two-month extension of the two-percentage-point payroll tax holiday to 4.2% from 6.2%. They say the short expansion makes no economic sense. Then neither does a one-year expansion.  No employer is going to hire a worker based on such a small and temporarily decrease in employment costs, as this year’s tax holiday has demonstrated.  The entire exercise is political, but Republicans have thoroughly botched the politics.

Their first mistake was adopting the President’s language that he is proposing a tax cut rather than calling it temporary tax holiday.  People will understand the difference–and discount the benefit.

Republicans also failed to put together a unified House and Senate strategy.  The House passed a one-year extension last week that included spending cuts to offset the $120 billion or so in lost revenue, such as a one -year freeze on raises for federal employees.  Then Mr. McConnell agreed with Senate Majority Leader Harry Reid on the two month extension financed by higher fees on Fannie Mae and Freddie Mac (meaning on mortgage borrowers), among other things.  It passed with 89 votes and all but 7 Republicans.

Senate Republicans say Mr. Boehner is now demanding that Mr. Reid name conferees for a House-Senate conference on the payroll tax bills. However, Mr. Reid and the White House are having too much fun blaming Republicans for “raising taxes on the middle class” as of January 1.  Do not be surprised if they stretch this out to the State of the Union, when Mr. Obama will have a national audience to capture the tax issue.

If Republicans did not want to extend the payroll tax cut then they should have put together a strategy and the arguments for defeating it and explain why.

However, if they knew they would eventually pass it, as most of them surely believed, then they had one of two choices.  Either pass it quickly and at least take  some political credit for it.

Alternatively, agree on a stratagem to get something in return for passing it, which would mean focusing on a couple of popular policies that would put Mr. Obama and Democrats on the political spot. They finally did that last week by attaching a provision, which requires Mr. Obama to make a decision on the Keystone XL pipeline within 60 days, and the President grumbled but has agreed to sign it.

Now Republicans are drowning out that victory in the sounds of their circular firing squad.  Already four GOP Senators have rejected the House position, and the political rout will only get worse.

Messrs.Boehner and McConnell were gulled into going behind closed doors with the President, who dragged out negotiations and later emerged to sandbag them with his blame-the-GOP and soak-the-rich reelection strategy.  

At this stage, Republicans would do best to cut their losses and find way to extend the payroll holiday quickly.  Then go home and return in January with a united House-Senate strategy that foorces Democrats to make specific policy choices that highlight the differences between the parties on spending, taxes and regulation.

I have researched the largest tx increase Obama has planned for 2013. The report indicates the President  is setting up the U. S. economy for one of the biggest tax increases in  history in 2013.

I will keep readers informed in future editorials.

About edshallow