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Do Republicans really oppose temporary tax cuts, or just Obama’s tax cuts?

at 10:45 AM ET, 08/25/2011


(Joshua Roberts - BLOOMBERG)
In recent weeks, the politics of taxes seem to have flipped. Now it’s Democrats calling for the extension of a tax cut and Republicans arguing for a tax increase.

The tax cut in question, of course, is the payroll tax cut, which adds about $1,000 to the paycheck of the average American and which is set to expire at the end of this year. Republicans who were willing to let the federal government default on its debt to prevent even a hint of a tax increase are now willing to permit a $120 billion tax increase for next year. The question is, why?

One possible answer is that a large tax increase in an election year is good for them because it’s bad for President Obama and the economy. But that’s a pretty cynical explanation. Another is that they care more about tax rates on the rich than they do about tax rates on the poor. But they resist that argument. The real answer, Republicans says, is that they just don’t like temporary tax cuts.

”We don’t need short-term gestures,” explained Sen. Lamar Alexander. “Temporary tax rebates don’t work to create economic growth,” said Rep. Paul Ryan. Brad Dayspring, the spokesman for House Majority Leader Eric Cantor, says his boss “has never believed that this type of temporary tax relief is the best way to grow the economy.”

But as Jon Chait noted, Republicans proposed and passed temporary tax cuts in 2001 and 2008. Ryan voted for both packages. So did Cantor. And Alexander. So the GOP seemed to believe in temporary tax cuts when George W. Bush was president.

They continued to believe in them once Obama became president. In 2009, Senate Republicans proposed a a variety of alternatives to Obama’s stimulus proposal. One, authored by Sen. Jim DeMint, was a permanent tax cut that would have cost more than $3 trillion. But another, authored by Sen. John McCain, was a one-year cut to payroll and income taxes. Every Senate Republican -- including Lamar Alexander -- voted for it. Mark Hemingway, a reporter at the conservative National Review, backed them up. “Republicans and conservatives have been banging the drum for payroll tax cuts as an economic stimulus for months,” he wrote.

And Republican support for temporary tax cuts has not been limited to stimulus measures. In 2001, the GOP passed the Bush tax cuts through the reconciliation process, which meant they had to make them temporary. That’s why they were set to expire in 2010. Republicans then preferred a two-year -- that is to say, very temporary -- extension of all of the cuts to the Obama administration’s offer to make all of the cuts for income under $250,000 permanent.

In other words, Republicans have frequently fought for temporary tax cuts. When offered the choice between a larger temporary tax cut and a smaller permanent tax cut, as happened in 2001 and 2003 and 2010, they have opted for the temporary tax cut. Now that Obama has come to endorse a temporary tax cut, they have stopped supporting it -- a pattern we’ve seen on many other issues, as well. But the idea that the party has had some steady, policy-based objection to temporary tax cuts just doesn’t fit the record.

 
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