Why Republicans Turned Against Payroll Tax Cuts

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JONATHAN CHAIT AUGUST 24, 2011

Why Republicans Turned Against Payroll Tax Cuts

In 2001, as the economy slowed, Republicans endorsed temporary payroll tax cuts in order to boost demand. And again in 2008, when the economy slowed, they endorsed payroll tax cuts to boost demand:

Giving temporary tax rebate checks to families, as important as that is, is not the same as economic growth,” said Representative Jeb Hensarling of Texas, chairman of the Republican Study Committee. “If you’re going to have an economic stimulus package, it ought to contain some economic stimulus.”

The current Republican position, when faced with far higher unemployment than in those previous situations, is to oppose temporary payroll tax cuts. Paul Ryan, the party's new economic thought leader, now argues that demand-side stimulus merely provides a "sugar high." That didn't stop him from voting for temporary payroll tax cuts in 2001 and 2008. He was okay with giving the candy bar to the mildly hungry fellow in 2001 and to the same, hungrier guy in 2008, but not to the same, now starving man today.

James Fallows sees boundless, unfathomable cynicism:

I had thought that Republican absolutism about taxes, while harmful to the country and out of sync with even the party's own Reaganesque past, at least had the zealot's virtue of consistency. Now we see that it can be set aside when it applies to poorer people, and when setting it aside would put maximum drag on the economy as a whole. So this means that its real guiding principle is... ??? You tell me.

I actually think there are two guiding principles here. One is that Republicans favor a more regressive tax code, and resent the middle- and low-income earners' lower tax rate than faced by the rich. Cutting taxes for the rich is always the party's highest priority. But a second principle is a desire to boost economic growth under Republican presidents. Republicans are willing to support demand-side stimulus if a fellow Republican occupies the White House, but doing the same thing under a Democratic president is merely to stimulate his reelection prospects.

I don't think that Republicans consciously think in these terms. As I've argued, I think that under a Democratic president, the long-term costs of short-term stimulus just suddenly appear to be far less worth it than they appear under a Republican president.

In any case, this does seem to be an incredibly powerful political message for Democrats, one they ought to highlight from now until the election in order to demonstrate the real nature of the GOP's position on taxes.

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posted in: jonathan chait, jeb hensarling, paul ryan, texas

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