Payroll Tax Compromise Common Sense With A Bitter Aftertaste

Isaiah J. Poole

“If you want to have an argument about whether you want to help people making $40,000 or people making $1 million, we’re happy to have that argument,” Nadeam Elshami, a spokesman for House Democratic leader Nancy Pelosi, was quoted today by the Christian Science Monitor as saying.

But Republicans were not, at least not over whether to extend payroll tax relief to America’s workers. That is the key reason why House Republicans folded on their insistence that a payroll tax cut be “paid for” with cuts elsewhere in the federal budget. And with that question settled, Congress is also moving toward agreement on continuing extended unemployment benefits and on forestalling a scheduled 27 percent cut in Medicare payments to doctors.

The conservative position was hypocritical and proved unsustainable. Never have conservative lawmakers insisted that tax relief for millionaires, billionaires and multinational corporations be “paid for” with spending cuts. And in our own email campaign targeting House Speaker John Boehner and Senate Republican Leader Mitch McConnell, we pointed out that “while Republicans are arguing against extending the payroll tax cut that provides at least some cushion to the strapped middle class, they are continuing to demand more tax cuts for millionaires and billionaires.”

The whole point of the payroll tax cut was to be an economic stimulant, to inject more spending directly into the economy, and to take spending out of the economy by cutting government services—most of which would have gone to the very same people receiving the payroll tax break—made no sense.

Nonetheless, it took sustained pressure from groups such as ours to convince Republican leaders that their position was untenable. In that sense, this was a hard-won victory.

It is also one with a bitter aftertaste.

Reports of the compromise that will extend unemployment benefits to the long-term unemployed and keep up payments to Medicare doctors contain some provisions that show conservatives’ deep desire to erect barbed wire around the pillars of economic security. CNN.com reports:

  • Republicans say the deal would allow states to drug test unemployment beneficiaries if a) they are unemployed because of a failed or refused drug test or b) if they are applying for jobs that require drug testing.
  • Long-term unemployed: would have to go through a “reemployment assessment”, according to Republicans. This would assess what skills and services they need to be hired and require that they participate in recommended programs.
  • Job search requirements: Republicans say the deal would issue a first set of “national job search requirements” for those receiving unemployment benefits. We are waiting for details on what that means.

These are a step back from what Republicans initially proposed, which would have done such things as allow drug testing for all people receiving unemployment benefits and insist that a person wanting to collect on unemployment receive a high school diploma or equivalent. Still, this compromise would move the country a few feet closer to what appears to be the ultimate goal of conservatives: to make the economic supports we offer people who fall off the economic ladder as punitive as possible, and to demean the people who would deign to try to use these supports to get back on their feet.

Speaking of punitive, this compromise also throws a gratuitous punch at federal workers. They would be asked to contribute more to their retirement pensions, and a new formula will mean they will get less of a pension when they retire. After a two-year wage freeze through the end of this year, and the prospect of a third year of a wage freeze, this is beyond asking federal workers to make a fair sacrifice to help get federal spending under control. This is using a cudgel against federal workers—one in which many federal workers will have less take-home pay even if they get the meager half-percent wage increase President Obama proposed for 2013—as part of an anti-government ideological agenda. The American Federation of Government Employees calculates that Republican proposals would extract from federal workers $15 billion to help cover the cost of unemployment benefits plus another $45 billion to help pay for a severely flawed transportation bill. Keeping federal workers demoralized is part of the conservative modus operendi of keeping government dysfunctional as an instrument of the common good.

Still, one takeaway is that progressives made their stand, and the bankruptcy of the conservative argument was made plain for all to see. It could not stand up to the heat of informed, aroused activists. We ought to take some courage from that.

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