John Feehery: Speaking Engagements


Paying for Tax Cuts

Posted on November 30, 2011
There is a slight but notable shift in the Republican rhetoric for tax cuts.

Congressional Republicans are now insisting that an extension of the payroll tax cut be paid for with spending cuts elsewhere in the budget.

Now, granted, the payroll tax cut is not your normal tax cut.  Because these taxes notionally flow into the Social Security Trust Fund (a mythical place of land and honey and high, impenetrable walls, yet filled with smoke and mirrors), cutting off that flow of money is not the normal way to do business.  As some Republicans have pointed out, such an action could be destabilizing to our retirement programs, which is why they oppose it.

I think the Republican leadership makes a compelling case that to extend the payroll tax holiday, you must find ways to cut spending elsewhere.  Otherwise, the government’s fiscal imbalance continues to grow dangerously, and the whole social safety net becomes much stable financially.

I get all of that, and I appreciate what they are doing.  But the leadership needs to be exceptionally clear to the GOP base that this fiscally responsible decision on the payroll tax does not set a precedent for other tax cutting in the future.  It won’t be an easy case to make, but it is important that they make it.

Republicans are using this as an opportunity to cut spending elsewhere in the budget.  And they are also strengthening their case when Democrats demand that the GOP extend unemployment insurance and the Doctor’s fix.

You can do all the spending you want, but you have to pay for it.  That is the message coming from the Republicans, and it is a good message.  Re-installing pay-as-you-go budget procedures would be good first step towards fiscal responsibility.  Congress let those procedures lapse early in the century, when the deficit didn’t seem to be much of a problem.  Insisting on them now could be very useful.

My own personal opinion is that extending the payroll holiday, extending unemployment insurance, extending the AMT patch, and paying the doctors more – all on the heels on the Super Committee collapse – is little bit insane.  Unless, of course, you pay for it all with spending cuts all over the place.  But that’s just my opinion.

In the meantime, Congressional Republicans are going to have to do an exceptional job of fighting the message war on this particular debate.  The Democrats have an easy message to soaking the rich to pay for tax cuts for the poor.  The GOP better find easily identifiable spending cuts that beats the socialist claptrap coming from the other side.

Subscribe to the Feehery Theory Newsletter, exclusively on Substack.
Learn More