Earlier this week, Senate Republicans rolled out their proposal for financing an extension of the Social Security payroll tax cut scheduled to expire at the end of December. Disappointingly, the conservative counteroffer is to pay for this job creation measure by cutting federal employees' jobs and wages. The "pay-for" proposed by Senate Democrats -- a 3.25 percent surtax on the 1-in-500 households earning over $1 million -- for an expansion of the payroll tax cut is anathema to conservatives; Senate Republicans have already filibustered a litany of job-creation proposals that would be financed by varying millionaire surtaxes. Last night, the Senate Republicans filibustered yet another such jobs package -- both the proposed extension and expansion were rejected in the Senate.
The Senate Republican proposal would limit federal agencies to hiring only one replacement employee for every three full-time employees leaving the agency until employment has fallen by 10 percent. This would result in roughly 280,000 job losses -- ironic, given that the purpose of the payroll tax cut is to create jobs. Someone should remind the GOP that the purpose of a pay-for is to offset the cost of a policy, not its impact.
Laying off hundreds of thousands of federal workers is terrible policy for reasons beyond causing job loss during a jobs crisis. First, it ignores the need to keep up with a growing population. These civil service jobs deemed unnecessary by Senate Republicans include one out of 10 federal judges, FBI agents, Veterans Affairs doctors, National Institutes of Health cancer researchers, food safety inspectors, and air traffic controllers, to name just a few.
Second, haphazardly cutting certain agencies' payroll would in many cases actually increase the budget deficit. Fewer Internal Revenue Service auditors would mean less tax enforcement and revenue. (In fiscal year 2010, 22,710 full-time IRS enforcement officers brought in $58 billion -- an average of over $2.5 million per employee.) Fewer Medicare fraud investigators would mean more erroneous payments and unprosecuted fraudulent claims. Fewer employees at the Security and Exchange Commission would mean less enforcement of insider trading laws and greater incidences of financial fraud. As Brad Plumber points out, the SEC lost 10 percent of its staff between 2005 and 2007, even as the financial system's rise in complexity would have justified a larger workforce. Small wonder the agency was unable to adequately identify financial institutions at risk of collapse or uncover Bernard Madoff's multi-billion-dollar Ponzi scheme.
The Republican proposal would also freeze federal employees' pay through 2015, extending a two-year freeze by another three years. Based on the Congressional Budget Office's economic projections that would mean an 8.3 percent real wage cut for all federal employees over five years. The bill also symbolically proposed barring millionaires from receiving unemployment insurance and food stamps, and, less symbolically, would raise Medicare premiums for millionaires. (These mandatory savings account for only four percent of the proposed spending cut -- the real money comes at the expense of federal workers, not millionaires.)
The proposal would book "savings" for this reduction in federal payroll be downwardly revising the discretionary spending caps for the second phase of the Budget Control Act (i.e., the debt ceiling deal) by $222 billion. If Congress allows the automatic sequestration cut to be triggered for 2013, the $109 billion cut for fiscal 2013 would come from this lower spending baseline. The unbalanced, spending-cuts-only approach to deficit reduction set in place by the Budget Control Act would be made even more lopsided.
The Senate Democratic proposal would raise $265 billion for an expanded payroll tax cut, leading to accelerated GDP growth going into 2012. Employees' payroll tax rates would fall from 4.2 percent in 2011 to 3.1 percent in 2012 (instead of reverting to 6.2 percent as scheduled) and businesses would see reduced payroll tax rates for the first $5 million in payroll and limited expansions of payroll. The Senate Republican proposal would finance a $120 billion extension of the existing two percentage point payroll tax cut, which would leave the GDP accounts unchanged relative to current budget policy, with $231 billion in spending cuts. This would create an unnecessary drag on economic growth for two reasons. First, it would cut spending by significantly more than needed to offset the cost of the tax cuts. Second, while permanent tax increases on upper-income houses have relatively little impact on near-term economic activity, government spending cuts have a very adverse impact on growth and employment during periods of depressed economic activity.
The dog and pony show that was the super committee made clear that the 112th Congress is incapable of breaching a deep ideological rift over taxation and how to address the long-term budget deficit. If Democrats and Republicans can only agree that temporarily increasing middle-class paychecks is good for a weak economy, there is a third option for Congress: it should simply pass the tax cut without any offsets. After all, Congress didn't pay for last year's $858 billion tax deal that extended the Bush tax cuts for high-earners (tax cuts averaging $22,000 for households making more than $200,000). So why must we now insist on paying for an extension of a significantly cheaper middle-class tax cut? The only compelling reason to negotiate a payroll tax cut pay-for is to set the precedent that the Bush-era tax cuts only get extended if fully paid for. And voters didn't seem to like the $4.5 trillion pay-for proposed in the House Republican budget.
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Leo Hindery, Jr.: The Payroll Tax Cut Extension, the Republicans and Mitt Romney (et al)
These programs are already in trouble. If you like these programs and want them to still be in existance in 10 to 20 years from now, you need to raise the payroll tax, not starve the programs to death by cutting funding by one-third. Everybody whose looked at this knows this to be true. If you simply add another 1% to the employer and employee portion of the tax now you save the programs for the future. If you don't do anything now or even worse cut the contributions now (as is the plan of most Democrats and Republicans), the future increase in taxes will have to be more drastic or quite possibly it will be unsavable.
As such, if a portion of the government employees are no longer producing something more valuable for society then the cost to keep them employed, then it is to the benefit of all to remove them as a government cost and thereby they will end up in the private sector contributing towards the actual creation of wealth. A government job shouldn't be seen as welfare, if they aren't producing a net benefit, they need to be let go.
JOBS
JOBS
JOBS
economy
deficit...........
cutting alone will not solve anything. We need more revenue.
this is exactly the point--the more they cut cut cut the less the government is able to do, self fullfilling the "government can't do anything right" claim. How many people--average low information voters I refer to here--think that it is a failure of the government that the crisis happened rather than pure unadulterated greed and fraud?
At the end of the Dot Com Bubble, in 2001, Congress gave W a 1.5 Trillion dollar Stimulus. The unemployment rolls had gone up from 4.5% to 5.5%. From $350 to $500 were sent out to every tax payer.
In 2004 he got another Stimulus and more cash went out to tax payers.
But when Obama came in we were down 8 million jobs and the unemployment had gone from 5% to 10% and Congress gave him half of what Bush got.
Someone saw a bumper sticker the other day. It was on a limousine, it said "I won't hire till he is gone".
The Right are economic traitors and have been so since Reagan. They don't love America, or God. They just have vending machine for a heart and someone has to keep feeding it Dollars. It may as well be you.
Social Democrats insist upon continuing to increase the size and scope of government at all levels until it eventually encompasses the entirety of our lives and fortunes under the rubric of equality.
The direct consequence of this position is to continue to turn over ever more of private income and wealth to government in a doomed to fail effort to keep this bloated Leviathan from the bankruptcy it so richly deserves - with every last cent of OTHER PEOPLE'S MONEY.
At long last, the Tea Party Revolution arose in response to this effort to turn America into a socialist state, insisting that the freedom upon which America was founded once again take priority over never-to-be-achieved "equality" sought by the left.
Welcome to the revolution.
And we may have as many as 100,000 postal workers laid off.
When the services fail, I guess we'll just have to privatize them all..... you know, create part-time jobs
with no benefits at $10 hr.
Middle class - where.....
$8-$10 hr jobs - bye bye middle class