After months of negotiations that found congressional Republicans in the unaccustomed position of resisting the extension of a modest tax cut, Congress has passed a package that will prevent a $100 billion tax increase and partly offset some unemployment-benefit and Medicare expenses by wringing concessions from new federal employees, who will be required to contribute more to the cost of their retirement pensions, and by trimming $5 billion from one of the many questionable new programs established under Obamacare.
While we welcome the newfound Republican hawkishness on the deficit, a salubrious result of the Tea Party’s influence, the GOP’s hesitancy in extending the payroll-tax cut was an odd thing. The arguments that some Republicans made against it — that temporary tax cuts have little or no effect on economic growth and jobs, that there were insufficient offsets to neutralize the revenue effects of the tax cut — might have been made against any number of tax policies that Republicans support with good reason, the extension of the Bush tax cuts prominent among them. This is not the moment, economically or politically, for a tax increase, a fact of which Republicans will want to remind the electorate regularly as President Barack Obama prepares to execute a class-warfare campaign heavy on tax hikes for “the rich,” a group that Democrats keep defining down (from $250,000 a year in Obama’s 2008 election rhetoric to less than $200,000 in his most recent budget proposal).
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