Skip to comments.Great news: Deal struck on extending temporary tax cut that hasnít boosted the economy at all
Posted on 02/16/2012 9:55:43 AM PST by SeekAndFind
Yeah, I know I'm supposed to feel all warm and fuzzy about the fact that Democrats and Republicans didn't play this out to the 11th hour, like they do with every other dispute these days. We're supposed to cheer because the system worked and it produced a bipartisan result in a year that will see precious few of them. Too bad that it sucks money out of an already-ailing trust fund while delivering none of the economic impact promised when we tried it last year:
Congressional negotiators resolved all differences on an agreement to extend the payroll tax cut and unemployment benefits while avoiding a fee cut for Medicare doctors for the rest of the year, leaving only technical issues to sort out.
“It’s good for the country. It’s very good for the country,” Montana’s Max Baucus, the Democratic chairman of the Senate Finance Committee, said early Thursday in announcing the deal.
But resolving those technical issues and getting the necessary signatures required to finalize the conference report was expected to take through at least Thursday.
“For the good of the country”? Really? It’s more for the good of incumbents who stepped into a trap in December 201o when they first proposed the supposed stimulus of the payroll-tax holiday. The extra $40 a week average ended up providing such a big stimulus that most people never even noticed it, and the American economy growth rate managed to drop from 2010 to 2011. The only reason Congress was in such a rush to work in bipartisan fashion to extend this temporary, ineffective flop was to avoid having the other party accusing them of hiking taxes on the middle class in an election year.
Chuck Blahous calls the spectacle a lesson on how not to make public policy, and gives seven detailed reasons why. He concludes:
The political dynamic surrounding the payroll tax cut has now evolved in such a way that neither party wants to be blamed for its expiration, so it will likely be extended even though it has now become almost a perfect storm of policy mistakes. Its ultra-temporary nature undoes virtually all of the positive stimulus impact claimed for it, while the adverse effects include high policy uncertainty, undercutting budget transparency, increased fiscal pressure, and lasting damage to Social Securitys financial and political foundation, this last of which may well prove irreparable.
Our public policy process is ever an imperfect one, necessarily producing messy outcomes because of the compromises necessary between conflicting perspectives. But even by these standards, it is rare for policy makers to inflict as much damage as is being done with the payroll tax cut. If lawmakers cannot muster the will to terminate it now, one must hope that they are able to do so before it goes on too much longer.
We need to end the temporary tax gimmicks, especially those that have nothing to do with long-term investment, and instead reform tax codes permanently and reduce regulation so that investors can price risk effectively. Programs like the payroll-tax “holiday” make the investing environment worse by introducing far too much instability and uncertainty into those calculations, as well as accelerating the fiscal time bombs in our entitlement programs. That’s why this is more of a headdesk moment than a celebratory event.
* FIX IT (Make it competitve).
* FLATTEN IT ( Make it simple and understandable ).
* FORGET IT ( Make it permanent ).
All these tinkering around the edges ( 6 months, 2 years, 3 years, temporary this, temporary that, etc ) will only make it DIFFICULT TO PLAN ahead for businesses and cause more UNCERTAINTY.
No one will think of hiring with uncertainty.
Also, a word about that other term being used TARGETTED. Please dont use that word, you boneheads in Congress !!
That word is code for CRONY CAPITALISM, FAVORITISM and PORK BARREL SPENDING.
No matter how smart you think you are, you simply CANNOT KNOW which sector of the economy will be competitive to meet demand. LET THE MARKETS DECIDE AND STAY OUT !
There, Ive said my piece. The ball is in your court.
And people will spend...
it's just a matter of getting rid of Obama and all the uncertainty that goes with "The Idiot and His Czars".
GOOD News: The GOP are going to extend a miniscule “temporary” tax cut that hasn’t helped the economy. Bartender- another round!
BAD news: The GOP are going to extend a minsicule “temporay” tax cut that hasn’t helped the economy, that has continued to underfund and thus raid social security in exchange for the vote of giving Joe Sixpack a bit more beer and cigarette money, and they are going to impose some other economy-crippling tax or fee to “pay” for it.
Where is the graphic of the audience clapping wildly at this craven stupidity and cowardice?
The perpetual debate on these cuts distract the news cycle from the real thing they should be discussing, how to cut spending.
Plus, SS is already in bad shape. Cutting 2% there only makes it worse. It would’ve been better to just restore the 2% to SS and take decrease the lower tax brackets by 2%.
I agree with you Silverleaf, and to have the repubs fold with regards to paying for the cut by spending cuts somewhere else makes it that much worse. We better party hard now because the day of reckoning is soon approaching.
What it means is that the USA will hit the debt ceiling in the fall and the whole debate that occurred last summer will take place again just before the election.
As to whose political advantage this will serve is anybody’s guess.
Yes! Boehner and McConnell are so caught up in inside-the-beltway thinking, they couldn't even come up with that idea.
And, the increase in the paycheck didn't add up to the full 2% taken from SS.
Good New is that the Republicans did NOT step into the trap the Democrats prepared for this month. Any demands the Republicans would have made would would allow the Democrats to forgo the extension and BLAME A TAX INCREASE ON THE REPUBLICANS IN AN ELECTION YEAR.
It was a legislative trap that the Republicans did not fall for. It is similar to the other trap the Democrats want the Republicans to fall for - and that is to Tax the Rich.
We need to remember "Read My Lips, No New Taxes", when BUSH I failed to live up to this the Democrats and their media allies Pounced. They want despirately for it to happen again and Save their A$$e$.
We also need to remember Obama's promise on the last big compromise. That along with Military Cuts there would be CUTS IN SPENDING. In his budget he failed on this promise.
Big Surprise. Not.
The GOP should welcome any tax cuts, period. Cutting the deficit requires spending reductions.
Didn’t the Socialists tout FICA and Medicare as voluntary contributions that went into a “lockbox” to be there for their old age? I’m so freakin sick of the lot of them. From Obama and Reid right down to Boohoo Boner. Soon enough, the US will be totally bankrupt, unable to borrow more, Odumbass is putting our military in mothballs as we speak, so what the hell!! After he finishes destroying the country, someone can start a new one. Party on.
No one inside the Beltway that surrounds DC has the least bit of interest in solving our financial crises. In less that 30 years there were two outstanding examples of serious attempts to solve a financial crises - the first was by President Kennedy(D) the chief icon for the democratic party and the second was by President Regan(R) the chief icon for the republican party.
If the icons (dare I call them Gods?) of both parties demonstrated how to solve a financial crises why can't the current Congress critters, their staffs, and the host of supporting bureaucrats take the hint?
They fear the loss of their personal power.
As long as tax cuts are temporary and increased taxes are permanent, the Republic and its citizens are doomed. Can't make it plainer than that.
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