By coming to an agreement to extend the payroll tax cut, leaders from both political parties are destroying our children's future so they can keep their Congressional seats.
Republicans and Democrats refuse to embrace the American concept that we all must sacrifice for the good of the nation. The World War II generation and their predecessors all struggled and sacrificed so their children would have a chance at a better life. Our generation has reversed course as we lower taxes and increase spending on social programs without regard to the huge burden we impose on our children.
In 2010, I spoke out loudly against the extension of the Bush era tax cuts and suggested the cuts simply expire until our fiscal house is in order. Instead of making this tough decision, President Obama and Republicans cut a deal, supported by many Democrats, to simply continue the Bush tax cuts and increase the deficit. Everybody wins they said -- but we all knew it was everyone but the children who will inherit the cancerous deficit.
The issue this time is extension of the payroll tax holiday. Originally, the tax holiday was part of the compromise in December 2010 that also extended the Bush tax cuts. President Obama and other supporters billed the cut in Social Security from 6.2 percent to 4.2 percent as a temporary, modest and mild stimulus to get cash into the economy. Today, even though the recession is officially over, Democrats saw a way of embarrassing tax-cutting Republicans by insisting the payroll tax cuts be extended for one more year, which would be paid for by a 10-year tax increase on the rich. (Can you imagine our parents' generation resorting to such a scheme that steals from the future?)
Sadly, after first resisting the extension, the Republicans got on board as well. The GOP has adopted the strange view that if a temporary tax cut ends it should be considered a tax increase and thus somehow violates the party's "no tax increase" pledge. Never mind that payroll taxes are supposed to fund Social Security and Medicare, and both programs are heading off a financial cliff as they run out of money.
The Republicans were in a corner. They desperately wanted to extend the payroll tax cuts but they couldn't raise taxes. They had only one area of agreement with Democrats and that was to auction spectrum necessary for wireless broadband which would return over $10 billion to the U.S. Treasury. But that was simply too small a part of the $150 billion needed to fund the one-year extension of tax cuts.
The Republican negotiators were desperate to avoid going into the campaign season facing Democratic attacks on their tax-cutting credentials. With tax increases off the table, the Republicans put a federal pay freeze and Medicare means testing on the table. Shockingly, the Democrats rejected every offer by Republicans and stuck to their view that funding for the payroll tax cut can and should come only from new taxes on the wealthy.
Facing an impasse after several days of talks, on Monday the Republicans surrendered, not unlike the Patriots' decision in the Super Bowl's fourth quarter to let the Giants score; in both cases one side gave up fundamental principles in a desperate attempt to get on offense. House Republicans also gave up their fundamental promise not to expand the deficit as they say they are now willing to extend the payroll tax cut by simply expanding the deficit. While the Democrats do not stand for deficit-cutting, the Republicans do, or at least used to. Now both parties have failed our children.
Few would argue these payroll tax cuts are essential or critical to the well-being of the American people. Indeed, barely half of Americans even responded to a December telephone poll saying they favored the cuts.
Neither party wants to be accused by the other of killing the payroll tax cut so both parties have made a political calculation based on re-election. It is better to simply expand the deficit than do what's right. It is better to give in to what's best for re-election than do what is best for America and its future.
We are failing as a nation when the American people accept politicians who refuse to make the tough decisions. Americans can handle the truth. The media and average Americans should insist that we stop our national bleeding and start setting priorities. This means we are all going to have to sacrifice. If our American men and women in the military can risk life and limb for our future, then surely our politicians can make some tough choices for the future of our children.
The Republicans have sold out to the Democratic political ploy. Like the Patriots, they forgot fundamentals. And like the Patriots they have dropped the ball and may lose the game.
Shame on us for letting both parties in Washington play politics with the future of our children.
Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA), the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times bestselling book, The Comeback: How Innovation Will Restore the American Dream.