The New Republic

There's no logic to this thing. None. It's absurd. I'm beginning to understand the Dada movement. Nuts.

- Sophia

January 3, 2013 at 12:29am

You don't get it because the Republicans didn't get rolled, they pulled off a stunning coup. That's why the Senate Republicans were overwhelmingly in favor, to make sure the House had to follow through and not let the deal slip away. House Republicans were allowed to maintain their pseudo-intransigence and still get the benefit of the deal because Boehner was willing to bring it to the floor and rely on Democratic votes. The Senate Republicans "forced" his hand giving him cover to buck his caucus. Thus, Republicans got both a great deal and the ability to further stoke their hostility and crazy intransigence for the next round. That requires them to claim that they got rolled "and it won't happen again." I would be laughing up my sleeve if I were in their shoes.

- roidubouloi

January 3, 2013 at 1:34am

Of course, there's the roughly $2.7 trillion that the government owes the social security "trust fund" (misnamed, since there is neither trust nor a fund), which serves to support both more contributions to it (there being nothing in the "fund") and less (there being nothing in the "fund" being absolute proof it isn't a pension). Each time I see Senator McConnell's deadpan expression (anybody else notice?) it reminds me of his view, which he has stated many times but Democrats (including Obama) don't seem to hear, that if it were up to him, we wouldn't use income tax receipts to repay the sums "borrowed" from the "trust fund". With this "deal", McConnell, by default (yes, it's meant to have two meanings), will get his way (again, two meanings, the other being "his way" with Obama). Where will the government come up with $2.7 trillion to repay the "trust fund". Easy, it will borrow it, using the loan proceeds to repay the "trust fund". Which reminds me of the real estate developer's creed: a dollar borrowed is a dollar earned; a dollar refinanced on a loan is a dollar saved; and a dollar repaid on a loan is a dollar lost forever.

- rayward

January 3, 2013 at 7:13am

Oh, come on Noah! You know the difference between December 31, 2011 and December 31, 2012! The former was slightly more than 11 months before a Presidential election and the latter is not. There's your whole difference right there.

- wildboy

January 3, 2013 at 9:09am

I'm so sick of congress I could vomit. Who's idea was it to throw out the monarchy, again?

- Tristan

January 3, 2013 at 9:26am

Yes, wildboy. And that explains why Obama is even a worse negotiator today, having just won his re-election, than he was a year ago? Maybe it does.

- roidubouloi

January 3, 2013 at 11:25am

"And that explains why Obama is even a worse negotiator today, having just won his re-election, than he was a year ago? Maybe it does." Maybe it does, Roid, but who in government was negotiating for an extension of the payroll tax cut? Bernie Sanders, Tom Harkin, Dennis Kucinich, anybody? It was completely off the table from both sides before negotiations even began. Maybe if we had DC statehood and Senator Timothy Noah was out there pounding the lectern we could have gotten it extended, but it was a goner otherwise. Probably for worse reasons than for better, but it was still not an issue on the table in negotiations. That wasn't Obama's fault, it was everybody's fault.

- wildboy

January 3, 2013 at 11:45am

But, wildboy, the payroll tax holiday was the quid pro quo for Obama abandoning his insistence on the sunset of the tax cuts for income above $250,000. If the payroll tax holiday was off the table, then for what did Obama now agree to raise that ceiling to $400,000 AND, worse, make the Bush cuts permanent below that? The very least Obama could have gotten for those concessions was to move the debt ceiling to be in sync with the budget cycle to take it away as a weapon -- every time a budget is approved it should include adequate debt authorization to cover that budget. If you compare the two deals, you see that Obama got nothing at all for moving up to $400K and making the Bush cuts permanent. Is it any wonder that Republican Senators were overwhelmingly in favor and the Boehner was willing to bring the matter to the floor and rely on Democratic votes?

- roidubouloi

January 3, 2013 at 12:04pm

The greater weakness isn't the policy, although it is a weakness. The greater weakness is the politics. When working Americans receive their first paycheck in January, who will they blame for the reduction in their take home pay? Obama and the Democrats. If Obama had been patient and gone over cliff so working Americans would have first experienced a (somewhat larger) reduction in their take home pay before experiencing an increase in their take home pay after the "deal", who would they credit? Obama and the Democrats. Obama, no doubt, believed that working Americans would respond as (or more) positively to Obama and Republicans working together to avoid the fiscal cliff. I am all for comity, but I suspect Obama has seriously miscalculated the political benefits from comity, especially when working Americans absorb the actual effects of that comity on their paychecks.

- rayward

January 3, 2013 at 12:19pm

"But, wildboy, the payroll tax holiday was the quid pro quo for Obama abandoning his insistence on the sunset of the tax cuts for income above $250,000." Roid, what are you talking about? I don't recall any sort of public discussion to that effect or any sort of demand by any elected official (left, right or center) to tie the expiration of the payroll tax holiday to abandoning the Bush tax cuts sunset on income above $250K. Obama decided to abandon his insistence on the $250K sunset not because he thought that the GOP would extend the payroll tax holiday, but because he wasn't confident that moderate Democrats in the Senate wouldn't agree with the GOP to sunset the Bush tax cuts at a higher number. And the payroll tax holiday was never the White House's quid pro quo for a higher sunset numer -- it was extension of unemployment insurance, various working family tax credits from the 2009 Simulus Package and extension of various business tax credits. Obama got all those in exchange for his $400K sunset, so he was happy enough with the deal. Maybe he should have really been pushing the payroll tax holiday instead of (or in addition to) the other stuff, but he wasn't and neither was anyone else in Washington. Clearly, Obama can be dissuaded by left-wing protests to back off unwise conessions -- witness his backtracking on the chained-CPI and raising the Medicare eligibility age as part of the doomed Grand Bargain II talks. But someone on the left wing needs to be protesting, and the guy who writes the TRB column is not that someone.

- wildboy

January 3, 2013 at 1:30pm

wildboy, I keep thinking about when the Democrats took back the Senate the last time. I'm one of those people who believe that Chuck Schumer's whole philosophy around that election was what won it for us. I'd hazard that Schumer's constituency consists of more sub and ex-urban families making 250K to 400K than probably any other Senator (I'm sure you'll prove me wrong, but hang in here with me). He wrote a whole book and how beleaguered, middle class and going broke these families feel, that while they're with us on social issues, they were still swing voters because they felt that Democrats not only didn't listen to them, but mocked them for feeling that way at all, after all - they are wealthy by the standards of most of the planet, oh gee poor them, etc etc etc. Schumer was sick of that, forced us to listen to them, make real policy shifts towards them (and that ain't EITC) and now, well they aren't so swingy anymore are they? If we start in again with that progressive shtick - people making 250k don't deserve shit and they are already filthy rich, just being stingey again, compared to the Honorable Working Man, the Real Middle Class of this Fine Nation, Joe Biden's buddies in Ohio yadda yadda - it's only a matter of time before we lose the Senate again. I'd say a small amount of time. (I count myself as one of those whining progressives, trust me). I think Obama was thinking the same way from day one of these negotiations and had that 400K number all set in that smart head of his long ago. He's not going to say that because then his base whines that he's selling out to Geitner-itis, left over Third Way bastards, etc snore snore snore. Payroll tax doesn't mean much to these folks. I'm sure they think it would be nice for the workin' man to have more in his paycheck. But don't think they wouldn't watch Obama burn through his political capitol for that instead of them. It's too bad it had to work this way. I don't like it either. But I suspect in the end it keeps us the Senate.

- WandreyCer

January 3, 2013 at 1:52pm

If the economy comes back, the Republicans will claim it is because we broadened the tax base, while normal people will note that higher rates did not hurt.

- Nusholtz

January 3, 2013 at 3:06pm

"Republicans don’t like cutting OASDI because they buy into the fiction that it’s a pension contribution" Flatly wrong statement. Conservatives very well know that it's not a pension. Rick Perry called it a Ponzi scheme, for crying out loud. TNR editors, where are you? And I'm not sure why this is an issue. The payroll tax had to go back to normal at some point, and I've frankly seen very little to suggest that the recovery is in jeopardy because of its reinstatement to previous levels. Other than Noah's factually-challenged concerns.

- polcereal

January 3, 2013 at 3:20pm

My original understanding of the "payroll tax" cut was that it was an intended, temporary, bump to help prime the economic recovery. Meaning that it gave folks an extra 2% of their paycheck per month to go out and spend. I recall several pundits (a few here on TNR I believe), Dems and economists saying the original payroll cut was a bad way to boost spending because it would shortchanged SS funding to begin with. Effectively, the SS tax cut would expedite the bankrupting of the SS 'Trust Fund' because we had a two years of no pay-in to the system. I'm not sure what Noah is going after except perhaps he thinks that the SS tax shouldn't exist at all because it's not progressive enough but proposes a carbon tax that would what? Go to the general fund? Go to SS? He doesn't say. But we should shit-can the SS tax because, well, it's not progressive enough and well, SS is underfunded. That sounds about right. Or maybe we change the SS tax rules and make all income eligible for the SS tax with no income tax. That would bring in significant more money in for SS. I can understand the reasoning behind a carbon tax, but I think that is a separate issue that should be applied to address infrastructure and energy issues NOT the third-leg of the 'social welfare' stool. _________ The fiscal cliff negotiations - sunsetting the Bush Tax cuts & an agreed upon income ceiling, coupled with the automatic spending cuts are separate issues from the SS tax cut expiration. I see the expiration of the SS tax cut as probably the only thing all sides could agree upon. That it was temporary. THe current fiscal cliff deal is still kicking the can down the road and I'm not sure what O and D's were expecting to get in return for the $400K ceiling except getting the GOP to agree to cuts in military spending.

- singlspeed

January 3, 2013 at 3:25pm

Pardon the typos.

- singlspeed

January 3, 2013 at 3:26pm

I think Wandrey has an excellent and often-ignored point there. This is not just an American state of affairs but you can find it in Germany and France and the UK in different shapes and sizes. The problem is this: social democratic parties (under whatever name and style they operate) began a century ago in Europe as the party of the newly-enfranchised working man, and then woman, and more particularly as the political arm of organized labor, but now at the beginning of the 21st century their voters are spread across a much much wider spectrum economically. In the US there was no historical battle for the (white, male) franchise and the party landscape was different (e.g. TR was a Republican), but eventually labor and progressives found and reshaped the Democratic Party. In both cases the bulk of the electorate supporting these parties was working-class and lower middle-class people in times (1900-1950) of economic instability, depression, and war. As things improved after WW2 in the US and Western Europe, the social democratic parties began to be the representatives of increasingly prosperous skilled workers, unionized employees, public service employees, and the liberal side of the professional classes. After the primary threat of communism faded -- which was the historical alternative for the organized worker -- social democracy became very much the establishment, and party identity (which was once very important) started to loosen. Suburbanization and other social changes played a role. In the US the Democratic party was challenged from within and without by the anti-war movement, the women's movement, post-civil-rights movements for racial equality, and the like. But all in all, in most countries (Italy is a huge exception here) social democratic parties maintained the coalition that had formed after WW2, although they lost a lot of impetus when confronted by the "new conservatism" of Thatcher and Reagan that basically threw out the script and refused to accept the hitherto operative consensus that full employment mattered, regulation was needed, labor was a partner, etc. Social democratic parties also discovered that (a) there wasn't a lot of political profit in thinking about the folks at the lower end of the economic scale and (b) people at the bottom were not reliable voters anymore. So yes, Schumer is perfectly correct to note that there are plenty of people making (singly or as a couple) $250k-$400k and that they can be -- but don't have to remain -- faithful Dem voters, and that the line of argument that describes them as the outer ranks to the greedy super-rich (it starts with them and ends with the Koch bros.) is guaranteed to make them think that the GOP at least won't take their vote and dismiss them contemptuously at the same time. So if the $450 thing keeps the Senate under D, then I'm pretty sure I'm for it.

- ironyroad

January 3, 2013 at 3:40pm

"I see the expiration of the SS tax cut as probably the only thing all sides could agree upon. That it was temporary." So were the Bush tax cuts. It actually makes no fiscal sense in a fragile economy to raise taxes principally for the highest earners and the lowest. The payroll tax holiday should have been the last thing to go, when the economy recovers, and after all temporary Bush tax cuts were first allowed to expire. This is the sad effect of continuous Republican extremism. The irrational comes to seem acceptable, temporary payroll tax cuts, that give the greatest boost, dollar for dollar, to the economy are allowed to expire, while preserving, indeed making permanent, temporary high-end tax cuts that do almost nothing for the economy. We appease the extremists and we dig our hole deeper. Otherwise rational people have become so inured to Republican extremism that it is now the new normal.

- roidubouloi

January 3, 2013 at 6:50pm

Sure, irony. An additional $6,000 in Federal taxes was going to convert all those $250K+ Democrats into Republicans. How did you manage to convince yourself of that?

- roidubouloi

January 3, 2013 at 6:54pm

roi - it objectively happened and you're personifying why.

- WandreyCer

January 3, 2013 at 7:03pm

I didn't "convince myself" of anything roid -- I thought Wandrey made a good point about the Senate in respect of NY and by implication certain other well-off parts of the country and it opened up some thoughts on social democratic politics in general, not only here in the US, that I've had on and off for years (having also lived in Ireland, the UK, and Germany at various times). You don't have to agree, and indeed disagreement in a non-snippy tone is positively invited.

- ironyroad

January 3, 2013 at 8:16pm

It objectively happened? Really. When was that? Seems Bill Clinton objectively raised taxes and won re-election. Did that objectively happen or was I dreaming? By the logic expressed here, it seems that we really have no choice but to make taxes ever more regressive, pander ever more to those in the top 10%, 5%, 1%, so that the Republicans won't win and make taxes ever more regressive and pander to the top 10%, 5%, 1%. I hadn't realized that voters making more than $250,000 per year had become the new swing voting bloc.

- roidubouloi

January 3, 2013 at 8:30pm

I also hadn't noticed that Demcratic Senate seats in NY were at risk until we began to pander to the $250K+ swing voting bloc. Schumer went over to the dark side when he began defending the 15% tax rate on carried interests by which Wall Street gazillionaires pay lower tax rates on earned income than stock clerks. I used to like the guy, a lot. He was always helpful to me politically when I was a local Democratic party chair. I no longer pay any attention to him whatsoever. When he dies in office, I will look up.

- roidubouloi

January 3, 2013 at 8:39pm

Oh come on Roi, this is exactly what I'm talking about. If Schumer dies, you think his replacement will do anything differently? This purity requirement is luxury we simply cannot afford. Do you want to keep the Senate or not? It's still precarious, one or two smart operatives who pull their heads outs out in Missouri, Florida, VA, Montana, we're done. I'm sure you realize I was never speaking about NY Senate seats in the first place. Schumer barely paid attention to NY, why would he? His job was retaking the UNITED STATES Senate not passing purity tests that's for sure. His job was to retake the Senate and he did it. Look, I'm certainly not supporting Schumer's every move nor does anyone need to, he gets on my last nerve with his Wall Street ass kissing and some day I hope someone somewhere takes some form of leadership against them, but I wouldn't hold my breath on it being the Senator from New York in charge of the Senate re-election committee. I His targeting the 250k demographic got us the Senate Roi, there is no question. And he didn't do it hectoring about the payroll tax, he did it by selling his effing soul - I recall him shelving gun control long ago. I'm one of those families who would gladly pay my 6k, no question at all - nothing would make me a Republican, nothing. But the families that feel differently aren't necessarily sell outs, greedy or immoral. They are simply voters, customers we need. And we got em. Sausage making. Do you have another strategy that would have worked in 2006? The only reason George Allen isn't sitting in the White House was macaca, not the audacity of hope.

- WandreyCer

January 3, 2013 at 10:37pm

One point that often seems to be missed - the payroll tax "holiday" did not negatively affect SS's "coffers" as many seem to think. The 2010 act (continued in 2012) simply made up the difference to SS from general revenue. So, no impact to SS. More than a little impact to the debt, but that's what happens when you cut taxes, but that tax cut was probably worth borrowing for.

- Nari224

January 3, 2013 at 10:47pm

Sorry, wandrey. I don't buy any of that. Not one single word. Democrats are an overwhelming majority in NY. Senate seats are not at risk because they don't suck of to the top 1%. Not at risk in CA either. Or in most places where there are a lot of high-earners unless those are locked in Republican seats, in which case there is no risk either. What possible basis do you have for making this claim? "His targeting the 250k demographic got us the Senate Roi, there is no question." This demographic is miniscule. Tell me a single Senate seat ever won by Democrats by targeting this demographic and why we should think so. Why don't we just give everyone free money for votes. No more taxes. Borrow what the government needs. If we can't borrow it, no government. Happiness for all demographics. All of whom are wonderful people who should be supported in their desire for free money. i don't know a single Democrat, and I know a lot, who would switch columns because of $6,000 more in taxes, especially if they thought the total result of the tax increases would be the nation's fiscal health. I had two CA public school teachers today telling me today they would gladly pay more taxes, although they earn a lot less than $250K, if it would solve our fiscal problem. ______________________________ Nari makes a terrific point that I was unaware of. That means that the payroll tax holiday was actually an income tax cut for people whose taxes consist of payroll taxes rather than income taxes. Makes it even more ridiculous that the cliff deal raised taxes on the bottom and the top, leaving the oh so important $250K+ to $400K demographic unscathed. Nuts.

- roidubouloi

January 3, 2013 at 11:26pm

Roi, I"m not sure how you see a 2% return to the 6% SS tax rate to be worse than a 5% return to your FICA? The 2% return pays back into SS. Where does that 5% FICA bump go? As it stands, with my family's income our tax rate with the SS bump and no Bush tax cut expiration, I see a net cut of 3%. Under your scenario, I'd see a net rise of 3%. Personally, letting all of the Bush tax cuts expire would have been appropriate including the 2% on SS and I'd see a 7% rise in my overall tax rate. For someone making 50K a year, sunsetting the Bush tax cuts results in a 2% rise to a 10% rate. Whereas just the return to the 6% SS tax rate results in that same person keeping an extra $1K. ----- I would have preferred the return to Clinton-era tax rates for everyone plus sunsetting the SS tax-cut which would result in forcing Washington to renegotiate overall tax rates and making all income subject to the SS tax without the cap. We also need revisions to the AMT and specified spending cuts to the Pentagon, subsidy elimination, and trimmings to entitlement programs.

- singlspeed

January 4, 2013 at 3:26pm

Noah writes: "Almost anything we replaced it with (I’d favor a carbon tax) would be more progressive" Progressive means redistributive. Some redistribution should be present in any tax code for things like bridges, schools, etc. These are all common good services. But when it comes to social benefits for an individual, progressiveness is a drug and a moral hazard. If I can vote for others to buy me more stuff, I will do so every time. Voting to extend the SS tax ceiling is exactly that: I want more benefit, and I will take it from someone else's labor. There is a reason that EU social programs are not progressive. There is a reason that EU social programs charge the working poor heavily for these programs.

- seattleeng

January 4, 2013 at 3:36pm

Libertarian horsehit from seattle. Different day, same horseshit. The endless delusion that the distribution of income achieved by the market is divinely ordained, fair, or superior to an income allocation that takes account of macro-economic effects. In the very simplest terms, we cannot have an economy that consists entirely of software engineers, doctors, and accountants. There is no good reason why, in a country as wealthy as ours, everyone who works but is not one of these should be denied eduction, healthcare, and a decent retirement. That is not a "drug," it is common human decency. I have not the slightest doubt that seattle's description of how the EU funds its social programs is wrong. Every factual claim of seattle's that I have ever investigated has turned out to be wrong. I no longer bother. Waste of time. He invents the facts to fit his bigoted ideology. Somehow or other, the American people have managed not to vote to strip the wealthy in order to pay for social programs, notwithstanding seattle's insistence that that is exactly what they would do. It is the wealthy who live off the labor of others, not the other way around.

- roidubouloi

January 4, 2013 at 11:20pm

I really don't understand your question, singlspeed.

- roidubouloi

January 4, 2013 at 11:22pm