We noted earlier today that Congressional Republicans oppose an extension of the payroll tax cut. I don’t know whose job it was to explain to them that taxes affect revenue, which affects the deficit, but hats off to that guy. (Of course, a payroll tax cut is much more stimulative than maintaining the Bush income tax rates, for which the GOP ransomed the economy).
You’re going to be surprised here, but Republican opposition to the payroll tax cut is an entirely opportunistic, cynical position.
To recap: In 2001, we faced a mild downturn, one which monetary policy was more than adequate to address. Ryan was nonetheless enough of an ultra-Keynesian to insist on immediate stimulative tax cuts to boost demand. Now, we face a massive economic crisis and the Federal reserve is almost out of ammunition. Now Ryan has been converted to an odd, economic doctrine that insists on imposing contractionary fiscal policy. I’m sure that in Ryan’s mind, there’s some deeper principle at work than “stimulate the economy under Republican presidents and de-stimulate it under Democratic presidents.” But that is functionally the Republican position.
(The GOP might be engaging in more hostage-taking strategery, as Chait points out in that link: “Republicans oppose a payroll tax cut extension that does not add significantly to the long-term deficit on newfound anti-deficit grounds, unless it can be traded for another, far more regressive tax cut that does significantly add to the long-term deficit.”)
For good measure, at that link Paul Ryan advocates for a payroll tax hike on the grounds that a tax cut would cause “uncertainty for businesses”!
“Uncertainty for businesses” is the catch-all, data-free, substanceless talking point Republicans use to express their negative emotions toward the president.
Maybe Paul Ryan is right, and a payroll tax cut would certainly wreak havoc on small businesses’ balance sheets. Or maybe…