More Kick the Can
It’s strange. I was all set to write an article in (backhanded) praise of House Republicans getting behind a bill to extend the payroll tax cuts through November. The praise was for the bill being a single-issue bill, which is in line with their 2010 promise to voters. And backhanded for waiting until it became clear that they were going to take the blame for the payroll tax cut expiring.
But now I’m afraid I must withhold the earlier praise I was going to give. Not that anyone in the District of Columbia was exactly holding their breath for my praise anyway, but why have a political blog if you can’t issue cheers and jeers?
Anyway, it’s hard for me to issue anything but half-hearted cheers for the current deal. So today is a bit of a rant.
Oh, sure, it’s nice that unemployment insurance benefits will be extended. That money will certainly go right into the economy, since it’s pretty unlikely that recipients will sit on the money. And the payroll tax cut will do something vaguely similar for the people fortunate enough to have a job right now. And the “doc fix” in Medicare will assuredly keep doctors who would otherwise drop Medicare patients from doing so.
But, really, this is kicking the can out to after the November elections, without any real solutions. And no cuts anywhere to offset the costs.
I have no qualms about the unemployment insurance extension, as long as we remain in an economy with far more people without jobs than jobs without people. The extensions should not, however, persist if unemployment is dropping rapidly, or nearing five percent.
But the payroll tax cut? It’s taking money away from the Social Security Trust Fund, and giving it to people who already have jobs. A smaller percentage of these dollars will be injected into the economy than dollars in unemployment insurance benefits. It’s popular because it’s very hard for Republicans to say no to a tax cut of any kind, and it’s a low-conflict way to get some extra dollars into the economy, with some benefit. But this smacks far more of pandering and political gamesmanship than any particularly well-devised economic theory or principle. In that regard, it’s similar, though slightly worse, than the $300 checks that were handed out during the Bush years.
The “doc fix” avoids addressing an issue that has been brewing since Newt Gingrich was Speaker of the House. The Balanced Budget Act of 1997 changed the way Medicare payments were made to medical providers. But, over time, the change led to ever increasing cuts. When 2002 rolled around, an impending cut of five percent led doctors around the country to threaten to drop Medicare patients if the cut went through. So Congress passed a law to hold the cut off for that year.
And every year thereafter.
But why hasn’t this been fixed once and for all? Because Congress can’t agree to accept the expense (projected to be $300 billion over ten years). So they spend it, one year at a time, while pretending that these expenditures won’t continue any longer. It’s cowardly.
And, lest anyone be confused, I’m not pointing the finger at any particular political party. Republicans did it in 2002. Democrats did it in 2009. Republicans are back to doing it in 2012.
This deal is cowardly. It will help things out a little bit, but it’s a bandage when surgery is needed. And the doctors are refusing to operate. Maybe we need a different kind of “doc fix”.
- For Now, Senate Democrats Prefer One Deal for Payroll Tax, Other Expiring Policies (abcnews.go.com)
- Senate Dems Could Add UI and Doc Fix to Unfunded Payroll Tax Cut Bill (news.firedoglake.com)
- Payroll Tax Cut Negotiations: Unemployment Benefits Set to Drop from 99 to 79 or Less Weeks (news.firedoglake.com)
- House Republicans cave on payroll tax cut? (dailykos.com)
- Obama Welcomes Signs of Progress on Payroll Tax Cut (nytimes.com)
- Negotiators near deal on payroll tax cut, jobless benefits, doc fix (politicalticker.blogs.cnn.com)
- House GOP: Let’s Extend The Payroll Tax Without Pay-Fors (outsidethebeltway.com)
- Dems Plot Payroll Tax Cut End Game (alternet.org)
- Payroll tax cut fight returns, Obama calls on public to pressure Congress for extension (foxnews.com)