Thursday, December 22, 2011

Incredible: After Thousands of Attempts a Wall Street Journal Editorial Gets It Right

Placing Blame for the Payroll Tax Cut Debacle Where It Belongs – on House Republicans

To paraphrase John Kenneth Galbraith, one can pick up the Wall Street Journal, and without even reading the editorials know that they are wrong.  Something like this cannot happen forever, though, and finally the string of failures is broken.  The Journal has an editorial that analyzes and dissects the failure of the House to pass a compromise short term extension of the payroll tax cut, and finds blame where blame is due.

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.

When even the WSJ editorialists are incredulous at what Conservative Republicans have done, one knows the Conservatives have achieved a level of governing and political incompetence only science fiction writers can dream about. 

Senate Republicans say Mr. Boehner had signed off on the two-month extension, but House Members revolted over the weekend and so the Speaker flipped within 24 hours. Mr. Boehner is now demanding that Mr. Reid name conferees for a House-Senate conference on the payroll tax bills. But Mr. Reid and the White House are having too much fun blaming Republicans for "raising taxes on the middle class" as of January 1. Don't be surprised if they stretch this out to the State of the Union, when Mr. Obama will have a national audience to capture the tax issue.

The WSJ even gets it partially right on the economics of the issue, noting that this “gimmick” was not going to have much of an effect on employment (the employment effects are indirect, resulting from increased spending, not lowering the cost of hiring).

House Republicans yesterday voted down the Senate's two-month extension of the two-percentage-point payroll tax holiday to 4.2% from 6.2%. They say the short extension makes no economic sense, but then neither does a one-year extension. No employer is going to hire a worker based on such a small and temporary decrease in employment costs, as this year's tax holiday has demonstrated.

Yes, temporary tax measures are largely ineffective and one of the great problems with tax policy by both parties is the inability to set up a permanent tax structure.  But taxes are not the issue here, as the Journal notes

The entire exercise is political, but Republicans have thoroughly botched the politics.
Finally here is the advice from the Journal to the House

At this stage, Republicans would do best to cut their losses and find a way to extend the payroll holiday quickly. Then go home and return in January with a united House-Senate strategy that forces Democrats to make specific policy choices that highlight the differences between the parties on spending, taxes and regulation. Wisconsin freshman Senator Ron Johnson has been floating a useful agenda for such a strategy. The alternative is more chaotic retreat and the return of all-Democratic rule.

And one can see the real fear of the ultra Conservative WSJ writers.  The Republicans may lose the opportunity to take the Senate and the Presidency in 2012.  That is certainly an exaggeration, the 2012 elections will be decided by events that are yet to come and are unknown. 

Everyone expects the Journal will go back to its misleading, false and downright fraudulent editorials, but for now we can all rest for a few minutes knowing that there are some things House Republicans can do that even the WSJ cannot stand.  It is the seasons of miracles, you know.

1 comment:

  1. A good laugh from Taegan Goddard:

    December 22, 2011

    Quote of the Day
    "Incumbent presidents have enormous advantages. And I think what Republicans ought to do is what's right for America. They ought to do it calmly and pleasantly and happily."

    -- Newt Gingrich, quoted by the Washington Post, citing his own experience in warning congressional Republicans that the showdown over the payroll tax cut extension could end badly for Republicans.