Payroll Tax Cut Extension – Who will Blink First?

Congress and the Obama Administration have reached a gridlock on the Payroll Tax Cut Extension with a House vote yesterday that rejected a Senate bill by a vote of 239-193.  The House has previously passed a one year extension, a bill that was revised by the Senate to extend the payroll tax holiday for just two months.  The measure passed in the Senate 89-10.

House Speaker John Boehner asked for a conference to hack out the differences.  Eric Cantor, during an interview on FOX News Channel said that the two sides were not that far apart.  The House Republicans rejected the bill because according to them it created uncertainty in the business sector.

Instead of leading, President Obama chose to attack and even though he had asked for a one year extension initially, said that the Senate compromise was the only viable solution.

“Let’s be clear: Right now the bipartisan compromise reached on Saturday is the only viable way to prevent a tax hike

on January 1,” Obama said not long after the House vote. “Do not play brinksmanship. The American people are weary of it, tired of it. They expect better.”

Unfortunately this compromise would reopen the battle over the tax cuts when the Senate returns.  With the national debt now above $15 Trillion, the sides are separated on how to pay for the one year extension.  In either case the so-called tax holiday really takes $120 Billion out of the Social Security Trust Fund.

While John Boehner called on Harry Reid to recall the Senate, Reid has refused to budge on the two months bill.  It is now a war on words and rhetoric.  Meanwhile the paycheck of 160 Million Americans will be affected as of January 1st.  Obama started this fight based on class war and to this point he is winning, portraying himself as the champion of the middle class, while portraying the Republicans as the scrooge.

While Congress’s approval ratings are going into the basement, Obama’s approval ratings have gone up slightly above the mid 40s.

The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 21% of the nation’s voters Strongly Approve of the way that Barack Obama is performing his role as president. Thirty-nine percent (39%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18

A Wall Street Journal Op Ed this morning calls the Payroll Tax Cut a GOP fiasco.  It contends that the vote to reject the 2 month Senate bill extension has played right into the hands of the Democrats and the Obama Administration.

GOP Senate leader Mitch McConnell famously said a year ago that his main task in the 112th Congress was to make sure that President Obama would not be re-elected. Given how he and House Speaker John Boehner have handled the payroll tax debate, we wonder if they might end up re-electing the President before the 2012 campaign even begins in earnest.

The GOP leaders have somehow managed the remarkable feat of being blamed for opposing a one-year extension of a tax holiday that they are surely going to pass. This is no easy double play.

Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter, although he’s spent most of his Presidency promoting tax increases and he would hit the economy with one of the largest tax increases ever in 2013. This should be impossible.  WSJ

While President Obama should not lead in this issue and convince Senate Democrats to return to Washington and hack out a one year deal, it is easier for him to invoke politics and demonize Republicans.  If nothing gets resolved the President wins.  He can point his fingers at the Republican so-called “Do Nothing” Congress, despite the fact that Democrats only control the House.

The fact is that even after two years of a majority in  both the House of Representatives and Senate, Democrats have gone three years without a budget.  Let’s be clear that the Democrats are digging in their heels.  This is a no win situation for the GOP.  Class Warfare is working.

 

About the Author

Karl Gotthardt - Politisite Managing Editor Maj. Gotthardt is a Retired Military Officer with 35 years service in the Canadian Armed Forces. He spent most of his time in the Military in Infantry Battalions. Karl took part in training for Afghanistan as an Operator Analyst with the Canadian Maneouvre Training Centre. Karl is a qualified military parachutist and military free fall parachutist. He earned his U.S. Master Jump Wings in Fort Benning, Georgia. Karl enjoys working with horses for the last 24 year. He owns six. He has experience in breeding, training and of course riding.Karl was born in Germany and is fluent in both English and German and he speaks enough French to "get in trouble". Karl has written or writes at NowPublic, All Voices, Tek Journalism and many others.

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