You could see this trap being set a year ago, and yet the Republicans in Congress (displaying their usual ability to snatch defeat from the jaws of victory) willingly walked into it. Republicans have been attacked all month for the possibility that the lack of agreement between the House and Senate might cause the “temporary” payroll tax cut to expire.
First, the idea of a “temporary” payroll tax cut is stupid. Everyone knew when this agreement was reached that it would not last for only one year, because no politician is going to be responsible for raising taxes on everyone, especially lower and middle class workers. Congress was never going to allow this to expire at the beginning of an election year.
Second, the payroll tax is the funding mechanism for Social Security. I am all in favor of cutting taxes, but unless you are going to reform the entitlement it is simply irresponsible to slash the revenue for the program – especially when no one believed this tax cut would only last one year. All this policy does is endanger the future of Social Security, and add even more irresponsible debt to the mountain of debt that has been accumulated over the last three years.
But the way this is being spun in the mainstream media, Congress is never going to move the payroll tax back to where it was before the “temporary” tax cut was implemented, for fear of being attacked for “raising taxes” on the poor and middle class – despite the fact that everyone technically agreed to this tax increase when it was signed a year ago!
So now we have the perfect storm of bad policy and stupid politics. Everyone in Washington wants to see the payroll tax cut extended, if only for craven political reasons. But someone has to be the adult in the room make the point that if we are going to have these social programs we cannot simply put them on the credit card forever. It’s not going to get any easier in the future because the next Congressional election is always right around the corner.