Wonkblog: Payroll tax cut

A portrait of Washington in 2012

A portrait of Washington in 2012

The White House is reportedly looking for an alternative to the payroll tax cut that does the same thing as the payroll tax cut but isn’t called the payroll tax cut. This might seem a bit odd to you. But it’s a perfectly natural by-product of the GOP’s strategy of denying President Obama popular accomplishments.

Continue Reading »

Goldman Sachs: Whatever you do, Congress, don’t let the payroll tax cut expire

Goldman Sachs: Whatever you do, Congress, don’t let the payroll tax cut expire

The Congressional Budget Office has been warning for months that allowing the United States to go over the “fiscal cliff” would endanger the economic recovery. It estimates that the combination of the expiration of the Bush tax cuts, the sequestration cuts and other changes will plunge the nation into a recession, with real GDP falling 0.5 points and unemployment skyrocketing to 9.1 percent (the jobless rate fell to 7.8 percent in September).

Continue Reading »

House Republicans fold on payroll tax cut

Reports are coming in that House Republicans have caved: They’ll agree to extend the payroll tax cut for two months in return for Senate Democrats agreeing to a conference committee to work on a yearlong extension of the payroll tax cut.

So, crisis averted ... for two months. At which point, Democrats and Republicans are back in essentially the same position they’re in now: Democrats support extending the payroll tax cut, and Republicans don’t. And, once again, that will leave the Republican leadership caught in the middle, trying to negotiate a set of non-payroll tax cut policy concessions that they can use to convince their members to support the payroll tax cut itself.

Continue Reading »

Democrats and Republicans do not agree on the payroll tax cut


(Andrew Harrer - Bloomberg)
“Has this place become so dysfunctional that even when people agree to something we can’t do it?”

That’s President Obama speaking at a news conference earlier Friday. And, though it might be the right message for the White House as they try and put pressure on Speaker John Boehner, it’s not really accurate. The two parties do not agree on extending the payroll tax cut. Democrats want to extend it, and Republicans want voters to think they want to extend it. But those two positions are actually very different.

In “The Social Network”, Aaron Sorkin gives his Mark Zuckerberg character a devastating rejoinder to the Winklevii twins. “You know, you really don’t need a forensics team to get to the bottom of this,” he says. “If you guys were the inventors of Facebook, you’d have invented Facebook.” Similarly, if Republicans wanted to extend the payroll tax cut for a full year, they would have extended the payroll tax cut for a full year.

Continue Reading »

Romney is winning the payroll tax cut fight, cont’d

Political scientist Steve Teles e-mails some words of caution about the studies I cite in this morning’s Wonkbook:

Notice that the studies you cite are from a decade ago. They are reporting on time-bound phenomenon. That is, the period under study was one of relatively low partisan polarization. It was also one with pretty pervasive cooperation between the parties in Congress. And most citizens had little or no understanding of who ran Congress and what they did. Under such conditions, citizens tended to assume that the economy was a sort of management matter, and the president was in charge. We don’t know whether that same relationship holds when we have pervasive polarization and a much higher visibility Congress ...
The best parallel is to the economic models people used leading up to the financial crisis. They worked great, and then suddenly something weird happened and all the historical relationships (based on a short time period) got screwed up. You always have to ask this question about social science theories — are they just institutionally generated regularities, and so when the institutions change, so do the regularities.

That’s all very true. But I want to see some evidence that voters are behaving differently before I toss these models into the trash heap. And so far, I’ve seen the opposite.

Continue Reading »