Is the GOP caving on the payroll tax cut?

at 04:45 PM ET, 02/13/2012


(J. Scott Applewhite - Associated Press)
Up until now, House Republicans have said that any extension of the payroll tax cut for the rest of the year — a key stimulus measure — had to be paid for with spending cuts elsewhere. Democrats have balked at that, countering that the tax cut should be offset with a surtax on millionaires, if at all. So who will blink? The GOP, it seems. Sort of. As TPM’s Brian Beutler reports, House Republicans are dropping their demand that the payroll tax cut be paid for:

“Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the ‘doc fix,’” said GOP leaders in an official statement Monday afternoon.

That doesn’t put an end to the affair. House Republican leaders are saying they’ll agree to let the payroll tax cut through (assuming they can scrap together the votes), but that expanded unemployment insurance and the Medicare “doc fix,” which will cost about $60 billion together, still need to be paid for with offsetting cuts. Dave Weigel notes that this could change the dynamic of the standoff in a subtle but important way.

The payroll tax cut, after all, was wildly popular with the public — Republicans didn’t want to be seen as obstructing its passage. Unemployment insurance, by contrast, is important to Democrats and vital as stimulus (economists note that a failure to extend it could dent GDP by as much as 0.3 percentage points), but it’s a considerably more obscure topic. Republicans seem to be saying that they’re not going to stand in the way of a popular tax cut, but that Democrats will have to make concessions if they want the full stimulus package.

Update: On the other hand, Senate Democrats seem to think they’ve basically won this fight and that Republicans won’t be able to trap them over unemployment insurance. We’ll see how this plays out.

 
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