Their tax hike doesn’t apply to income from investments. It doesn’t apply to any wage income in excess of $106,800 a year. It’s the payroll tax that they want to raise — to 6.2 percent from 4.2 percent of your paycheck, a level established for one year in December’s budget deal at Democrats’ insistence. Unlike the capital gains tax, or the low tax rates for the rich included in the Bush tax cuts, or the carried interest tax for hedge fund operators (which is just 15 percent), the payroll tax chiefly hits the middle class and the working poor.
This tax-Joe-Six-Pack mania doesn’t end with the Journal. While President Obama has made clear that he supports extending the lower 4.2 percent payroll tax rate for another year, to keep the economy from contracting further, congressional Republicans have made their opposition equally clear. “I don’t think that’s a good idea,” said Dave Camp (R-Mich.), chairman of the tax-writing House Ways and Means Committee. Camp complained that it would push the deficit higher. House Budget Committee Chairman Paul Ryan (R-Wis.), the man who’d have us scrap Medicare, concurred. “It would simply exacerbate our debt problems,” he said on Fox News Sunday this month.
This concern for the debt, touching though it may be, didn’t keep Republicans from enacting two waves of tax cuts under George W. Bush. It hasn’t kept them from opposing our current president’s proposal to restore the Clinton-era tax rates on the wealthy. But when we’re talking about taxes on the majority of Americans, those who work for a living and don’t make six-figure incomes, the Republican brain lobe devoted to debt reduction through tax increases goes abuzz with synaptic frenzy.
The most telling Republican reaction to the president’s proposal to extend the lower rate has been one man’s equivocation. The man is Grover Norquist, author of the anti-tax-increase pledge that the vast majority of House Republicans have signed. On Tuesday, pressed by a number of journalists (most prominently, The Post’s Greg Sargent) to state his position on raising the payroll tax, Norquist sought to quietly steal away. “One would have to see the final legislation,” his spokesman, John Kartch, told Sargent, to determine “what is the net effect on total taxes.”
But unless Congress votes to extend it, the lower rate will expire on Jan. 1 regardless of its effect on total taxes. Norquist flat-out opposed letting the Bush tax cuts expire — though he did tell The Post’s editorial board that it didn’t technically violate the pledge, a position that he has since tried to obfuscate. Now that the payroll tax is slated to expire, though, Norquist is lost in contemplation (or something). Congressional Republicans inclined to increase the payroll tax — and I’m not aware of any who have come forth to oppose that idea — can do so, apparently, without fear of being labeled tax-increasers just because they’ve increased taxes.
Republicans like to complain that Democrats practice “class warfare” and “the politics of division,” as House GOP leader Eric Cantor argued on this page Monday. What the Republicans’ position on the payroll tax makes high-definitionally clear is their own class warfare on working- and middle-class Americans. Their double standard couldn’t be more obvious: Tax cuts for the wealthy are sacrosanct; tax cuts for everyone else don’t really matter. Norquist, Cantor, Ryan, Camp, the Journal editorialists and the whole Republican crew give hypocrisy a bad name.
House conservatives who have stalled legislation to raise the national debt limit are angry that it includes $17 billion in supplemental spending for Pell Grants, which some compare to welfare.
Legislation crafted by House Speaker John Boehner (R-Ohio) to raise the debt limit by $900 billion would directly appropriate $9 billion for Pell Grants in 2012 and another $8 billion in 2013.
This has shocked some conservative House freshmen who say they were elected to cut spending, not increase it. Some House Republicans think of it as being akin to welfare.
“I really don’t understand why we’re increasing spending in a bill supposed to be cutting spending,” said Rep. Andy Harris, a freshman Republican from Maryland. “It was negotiated without the input of a lot of members.”
Harris has indicated to The Baltimore Sun that he will vote no.
House Republican leaders say they included concessions to Democrats in efforts to forge a compromise that could pass both chambers.
“This is a compromise piece of legislation that was negotiated between the Speaker and the bipartisan leadership in the Senate,” House Majority Leader Eric Cantor (R-Va.) told reporters Thursday afternoon.
One major concession is the establishment of a select joint committee to assemble another deficit-reduction package later in the 112th Congress.
“The joint select committee is something that came from the Democrats. We don’t have all the cuts we like in this bill but we’re willing to compromise,” Cantor said.
The inclusion of the extra money for Pell Grants could cost Republican votes.
Rep. Denny Rehberg (R-Mont.) has compared Pell Grants to “welfare”.
“So you can go to college on Pell Grants — maybe I should not be telling anybody this because it’s turning out to be the welfare of the 21st century,” Rehberg told Blog Talk Radio in April. “You can go to school, collect your Pell Grants, get food stamps, low-income energy assistance, Section 8 housing, and all of a sudden we find ourselves subsidizing people that don’t have to graduate from college.”
Rehberg has not said how he will vote on Boehner’s bill.
Rep. Trent Franks (R-Ariz.), who has not revealed his position, said the Pell Grants have “been part of the discussion” among conservatives who are debating whether to support the bill.House GOP leaders postponed a vote on the plan Thursday evening because of opposition within their conference.
Funding Pell Grants has been a top priority for President Obama. In his 2012 budget blueprint, the president sought to preserve the maximum grant at nearly $5,550 a year.
President Barack Obama has said he is prepared to make “tough decisions” if Republicans show him a plan to prevent the US from defaulting on its debts.
The president said continued Republican opposition to any tax increases was impractical.
On Thursday a fifth consecutive day of cross-party talks at the White House between Mr Obama and congressional leaders failed to make a breakthrough.
The US must raise its $14.3tn (£8.9tn) debt ceiling to borrow beyond 2 August.
Failure to reach a deal would rattle a world economy still trying to put the 2008 downturn behind it, analysts say.
“If they [Republicans] show me a serious plan, I’m ready to move even if it requires some tough decisions on my part,” the president said during a news conference at the White House.
“I am confident that we can not only impress the financial markets, we can also impress the American people that this town can actually get something done once in a while,” he added.
But the president warned the country is “obviously running out of time”.
“So what I have said to members of Congress is that you need over the next 24 to 36 hours to give me some sense of what your plan is to get the debt ceiling raised,” he said.
President Obama said Republicans have a “unique opportunity to do something big” and stabilise the economy for decades to come, adding that a failure to raise the debt ceiling would mean “effectively a tax increase for everybody”.
On Thursday, Standard & Poor’s became the second of the major credit rating agencies to place US debt under review, citing an increasing risk of a payment default.
Another ratings agency, Moody’s, warned a day earlier that it might cut Washington’s triple-A debt rating.
President Obama said that if congressional leaders could not “find agreement on the path forward” in the next 24-36 hours, the negotiations would have to continue into the weekend, according to Democratic and Republican aides.
The political impasse boiled over on Thursday to the Senate floor, where Majority Leader Harry Reid, a Democrat, called House Republican Leader Eric Cantor “childish”.
Mr Reid said Mr Cantor “has shown he shouldn’t even be at the table” in the debt talks at the White House.
Mr Cantor reportedly told President Obama during Wednesday evening’s negotiations that the tax rises sought by Democrats simply were not going to happen.
He is also said to have urged the president to accept a short-term deal instead of a budget that would carry through to the presidential election in November 2012.
That is said to have prompted Mr Obama to say: “Enough is enough… I’ll see you all tomorrow,” before leaving the room.
US Federal Reserve chairman chief Ben Bernanke warned a Senate panel on Wednesday that a default would cause a “major crisis”, adding it would be a “self-inflicted wound”.
President Obama needs the Republican-led House of Representatives and Democratic-held Senate to agree a deal to trim the US deficit, and allow Washington to borrow beyond the 2 August deadline.
He has said he is willing to countenance cuts to social safety-net programmes dear to Democrats if certain tax breaks are eliminated.
Republicans have rejected the latter proposal, saying that would stifle investment and job growth.
By Travis Waldron on Apr 14, 2011 at 11:49 am, ThinkProgress
After pushing the government to brink of shutdown last week, Republican Congressional leaders are now preparing to push America to the edge of default by refusing to increase the nation’s debt limit without first getting Democrats to concede to large spending cuts.
But while the four Republicans in Congressional leadership positions are attempting to hold the increase hostage now, they combined to vote for a debt limit increase 19 times during the presidency of George W. Bush. In doing so, they increased the debt limit by nearly $4 trillion.
At the beginning of the Bush presidency, the United States debt limit was $5.95 trillion. Despite promises that he would pay off the debt in 10 years, Bush increased the debt to $9.815 trillionby the end of his term, with plenty of help from the four Republicans currently holding Congressional leadership positions: Speaker John Boehner, House Majority Leader Eric Cantor, Senate Minority Leader Mitch McConnell, and Senate Minority Whip Jon Kyl. ThinkProgress compiled a breakdown of the five debt limit increases that took place during the Bush presidency and how the four Republican leaders voted:
May 2003: Congress approves a $900 billion increase, raising the debt limit to $7.384 trillion. All four approve.
March 2006: Congress approves a $781 billion increase, raising the debt limit to $8.965 trillion. All four approve.
September 2007: Congress approves an $850 billion increase, raising the debt limit to $9.815 trillion. All four approve.
Database searches revealed no demands from the four legislators that debt increases come accompanied by drastic spending cuts, as there are now. In fact, the May 2003 debt limit increase passed the Senate the same day as the $350 billion Bush tax cuts for the wealthy.
When Bush was in office, the current Republican leaders viewed increasing the debt limit as vital to keeping America’s economy running. But with Obama in the White House, it’s nothing more than a political pawn.