19 September 2010

Suspending the payroll tax

I'm baffled that in a political system where the party in power is desperate for a jolt to the economy, and the other is singularly focused on tax cuts, the idea of a payroll tax holiday has somehow slipped through the cracks.

The refusal to even publicly broach this issue demonstrates two things -- severe partisan gridlock and Barack Obama's unwillingness to lead from the front.

Suspending the payroll tax for any period of time would, of course, immediately put money back in the pockets of ordinary, hard-working Americans.

President Obama has refused to even publicly address the subject. John Boehner and Mitch McConnell, while warning the White House to leave the Bush tax cuts alone, have been eerily silent on the issue. Obama seems unwilling to move forward with this wildly popular idea, a policy that seems to be naturally trans-partisan. Instead, the White House has suggested that they may support a tax credit for research and development, something that, while perhaps worthwhile in the long-term, won't have any stimulative effect on the economy for at least 6-12 months.

Boehner and McConnell have also been mute on the subject, which is why Obama should pounce. Six weeks from what is shaping up to be a bloodbath of historic proportions, the Republican leadership understands full well that they will likely reap huge rewards on election night regardless of whether they express any interest in working with the White House on anything of substance. Boehner and McConnell understand the unpopularity of the Obama agenda and the futility of the administration's feeble attempts to spur economic recovery.

And this precisely is why Barack Obama could perhaps save himself and his party politically by pushing ahead with a payroll tax holiday. Boehner and McConnell would then have two choices -- either sign on and publicly legitimize the president's idea, or oppose the plan and generate the strange spectacle of Republicans opposing tax cuts.

I would be willing to wager that 80% of voters would support a payroll tax holiday. McConnell and Boehner must be fearful of being put in a situation where they have to choose between legitimizing the president's policies six weeks from election day or opposing a clearly stimulative tax cut. The problem is that Obama is clueless as to how popular a payroll tax holiday would be, or spineless to stand up to the loud minority of his party that would oppose such a policy.

Thereby, Obama will continue to dig his party's grave, doing nothing to stem the overwhelming tide that's building against the Democrats.

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