House Balks at Payroll Tax Deal

Christmas sparring in the nation's capitol has picked up tempo, and we can look forward to another holiday season of contention as the Statists and right-to-be-let-aloners grapple to the mat. The WSJ reports on the Republican House's refusal to approve a Democratic Senate's bill to temporarily extend a payroll tax cut until February.

House Speaker John Boehner (R-OH) thinks that the Senate plan is dysfunctional.  "How can you do tax policy for two months?"  Good question.  And the answer is that you can't.

That such is the Democrats preferred method of addressing the economy--push matters out for a bit until the press can turn the tide in their favor, whereupon they impose their Statist wills in the name of fairness on the citizenry--explains why the economy has dragged long after it should have recovered.   

 Senate Majority Leader Harry Reid (D-NV) isn't concerned.

"When we met last week, Speaker Boehner requested that Senator McConnell and I work out a compromise," Mr. Reid said Sunday. "Neither side got everything they wanted, but we forged a middle ground that passed the Senate by an overwhelming bipartisan majority."

Why kicking this can down the road for two months is "middle ground" that Democrats want to occupy is explained by political strategy, not economic considerations.

Mr. Obama has positioned himself and Democrats as defenders of a tax cut for the middle class while painting Republicans as defenders of the wealthy. Democrats say they would be pleased to repeat this debate in two months if Congress approves the two-month extension.

Yes, Noman is sure that the Democrats would like to flail away at that straw man throughout 2012.  Nevertheless, reality is that Democrats' economic policies sap the middle class of vitality, and lard the troughs of the wealthy and politically connected (e.g., Jeff Immelt, Warren Buffet, George Soros, George Kaiser, Jon Corzine),

President Barack Obama has accused Congress, especially Republicans, of being obstructionist. 

Republicans, in turn, have criticized Mr. Obama and the Democrats for mismanaging the economy. The fight over payroll taxes gives ammunition to both sides.

More precisely, President Obama has accused Congress of being motivated to oppose everything he proposes simply and solely because of their commitment to seeing him fail.  He never sees reason or fairness in his opponents' positions, or acknowledges that they act from noble--perhaps mistaken--motives.  Rather, he has personalized the battle in his public statements: he who knows everything vs. they who hate everything.  His feigned persecution complex has been accompanied by bellicose class-warfare rhetoric, and obtuse legislative proposals.

Republicans are terrified by the imminent Greek-EU-like collapse awaiting the US because of unsustainable debt and runaway government spending.  Democrats refuse to reverse the course they kicked into hyperdrive in 2006.  So, Republicans dig in their heels, pull back on the reigns and yell "whoa!"  They look like obstructionists.

Man controlling trade has become tea parties, through the Republican Party, controlling runaway government.  Pass Noman a cup, please.

Thank God for obstructionism, at least in this case.  It's the only thing short of cleaning DC of Liberals that keeps our federal tax burden at merely oppressive levels.  It exposes their reckless spending to light.

Democratic cheerleaders like Robert Reich would love to return to the halcyon days of the 90% tax bracket.  That's a fair share in their book.  Thank God it wasn't in President Kennedy's book, who put an end to it.

Meanwhile, the political wrangling in DC continues.

Senate Majority Leader Harry Reid (D., Nev.) said he favored a yearlong extension of the tax cut—the same as Mr. Boehner (R., Ohio). But Mr. Reid said he wouldn't negotiate a longer-term deal until the House passes the Senate's temporary extension.

Mr. Reid said if Mr. Boehner rejected the Senate agreement, forged with Senate Minority Leader Mitch McConnell (R., Ky.), then he would be responsible for a $1,000 tax increase on almost every working American next year.

Boehner counters:

"The House has passed its bill, now the Senate has passed its bill," Mr. Boehner said. "Under the Constitution, when we have these disagreements, there could be a formal conference between the House and Senate to resolve our differences."

 Why Senator Reid would expect House Republicans to trust him, and pass the Senate's temporary extension in order to negotiate the year-long extension that both sides say they want is beyond Noman.  Not to put too fine a point on it, anyone who would devise such an arcane scheme is not trustworthy.  But, then, we already knew that about Senator Reid.

Noman laments that the Republican establishment could not hold its nose and support Sharon Angle, and other tea party insurgents, the way that they're always admonishing conservatives to support lukewarm candidates like Bob Dole, John McCain and Mitt Romney.

Had they done so, this year of political brinksmanship, economic stagnation, credit-rating downgrade, chronic unemployment, class-warfare and generally speeding towards Armageddon could have been avoided.

Postscript: On 12/22/12, House Republicans retreated after Senate Minority Leader Mitch McConnell (R-KY) urged them to accept the two-month extension and to defer working out a more permanent agreement with Democrats until later.  (We all saw how well that worked last November when the deficit reduction super-committee failed to specify $1.2 trillion in spending cuts.)  President "Obama ... chided Republicans for blocking something all parties agreed upon."  But, of course, all parties didn't agree on the two-month extension; they all agreed on a one-year extension, or said they did.  The two-month provision was at Democrats insistence.  House Majority Leader John Boehner rightly believed that "A two-month extension only perpetuates the uncertainty that too many employers already have in dealing with the economy and what's coming out of Washington."

Noman expects the nation's credit rating to be cut again.  Any government unable to curb its hell bent drive for hegemony over private activity is bound to dig itself a hole that it cannot climb out of.  The bond market still retains a moral integrity rooted in honesty that political leaders in this media environment have relinquished.