Can Republicans Steal Obama’s Thunder on Payroll Tax Cut?

Dec 2, 2011 6:00am

President Obama has spent the past few weeks trying to shame Republicans for their reluctance to embrace a payroll tax cut extension for workers. Now Republicans are trying to turn the tables.

Conceding that the tax break will ultimately pass the Congress with bipartisan support – last night’s Senate votes notwithstanding — GOP leaders have shifted focus of the debate to Obama’s plan to pay for it. And in doing so they’re hoping to make the president eat his own words.

Obama wants to offset an extension and expansion of the existing payroll tax cut with a new 3.25 percent surtax on all millionaires and billionaires — a plan Republicans say will go nowhere.  Instead, they’re offering  a menu of spending cuts that they say Obama will find difficult to refuse.

The president’s Simpson-Bowles Fiscal Commission, which concluded work one year ago, called for deficit reduction through, among other things, a pay freeze for federal workers, a reduction in the size of the work force by 10 percent through attrition, and means-testing benefits paid through Medicare, unemployment insurance and food stamps.

 All are components of the Republican plan, which the nonpartisan Congressional Budget Office said would reduce the deficit by $111 billion while extending current payroll tax cuts for one year.

In the past, Republicans also point out, Obama voiced support for several of those measures.

 ”The hard truth is that getting this deficit under control is going to require broad sacrifice. And that sacrifice must be shared by the employees of the federal government,” Obama said in November 2010 upon proposing a two-year pay freeze for all civilian federal workers.  

 As for asking wealthier Americans to pay their “fair share,” Obama said in July: ”I’ve said that means-testing on Medicare, meaning people like myself … you can envision a situation where, for somebody in my position, me having to pay a little bit more on premiums or co-pays or things like that would be appropriate. …  That could make a difference.”

The president said in any negotiation “we should make sure that current beneficiaries, as much as possible, are not affected, but we should look at what can we do in the out years so that, over time, some of these programs are more sustainable.”

So does the Republican plan steal Obama’s thunder?  The White House says no way.  

“It’s sort of a little — pick your metaphor, window dressing or gorilla dust,” White House Press Secretary Jay Carney told reporters Wednesday of the means-testing proposal to pay for the extension. “It’s a fraction, as they admit, of what their pay-fors are.”

 Carney said  “the foundation of [Republicans'] pay-for is basically a violation of the very agreement they made just a few short months ago” — during the debt ceiling debate – because the plan they put forward requires a reduction in the spending caps agreed to in the Budget Control Act.

“That’s the kind of stuff that drives Americans crazy about Washington, where you sign a deal, you have an agreement, bipartisan agreement, then you change your mind a few months later,” he said.

Moreover, while administration officials have praised as “progress” the Republicans’ willingness to enact a payroll tax cut extension, they say their focus on the pay-fors misses a fundamental point:  that Republicans don’t want to expand the payroll tax cut for workers or impose a new cut for businesses.

 Unlike the Democrats’ proposal, the White House says, the GOP plan “provides one-third less tax relief for America’s workers, does not help America’s small businesses and is paid for by unbalanced cuts that would break a bipartisan deal achieved in August and would undermine the nation’s ability to invest in areas that are key to America’s future, to maintain core government functions, and to defend the United States,” according to a statement of administration Policy.

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