Republican Hypocrisy on the Payroll Tax Cut

We’ve seen Republicans in Congress vote to obstruct the American Jobs Act, a bill that independent economists have said could create up to 2 million jobs. They’ve voted against keeping teachers in the classroom, cops on the beat and firefighters on the job.  They voted against putting construction workers back to work rebuilding our roads and bridges. 

In addition to blocking these job-creating measures, Republicans in Congress refused to compromise to tackle our nation’s serious deficit problem.  They chose to protect tax cuts for millionaires and billionaires at any cost, even if it means deep cuts to education, medical research and Medicare.  They will not budge from that negotiating position. 

And Thursday night, after weeks of saying “no” to just about everything, Republicans in Congress chose to allow taxes to increase on nearly 160 million hardworking Americans because they refused to ask a few hundred thousand millionaires and billionaires to pay their fair share.  They voted against a bill that would have not only extended the $1,000 tax cut for a typical family, but expanded that tax cut to put $1,500 in their pockets next year, and given nearly six million small business owners new incentives to expand and hire.  That’s not right.  It’s not acceptable.

Now, you’ll hear Republicans try to come up with a substantive objection to the payroll tax cut.  The fact is, we all know it’s a bad idea to raise taxes on 160 million working Americans.  Independent economists agree.  We can’t put our economy and the middle class at risk. We can’t play politics with the security of millions of American families and small business owners.   Republicans know this.  They’ve said so in past.  Those same Republicans who voted “no” last night have previously supported the payroll tax cut.  Let’s take a look:

Sen. Alexander

12/9/10: Sen. Alexander: “It Also Means That Your Employees Who Work There Will Get A One-Third Reduction In Their Payroll Tax Payments Every Two Weeks. And Maybe They’ll Spend Some More Money Creating More Jobs.”  ”QUESTION: And if you look at the proportions, though, of the top, top sector of earners in this country getting the bulk of the benefits, why does that help?

ALEXANDER: Well, if you’re a small business person in Tennessee, what this means is that you won’t be paying tens of thousands of dollars, perhaps more, in taxes and you can use that to create a job. It also means that your employees who work there will get a one-third reduction in their payroll tax payments every two weeks. And maybe they’ll spend some more money creating morejobs. So it’s a combination of policies that all together are focused on jobs.” [NPR, 12/9/10]

Sen. Kyl

11/20/09: Sen. Kyl: “…What You're Suggesting Here Is That You Can Do Some Things To Stimulate Job Creation And Certainly Something Like Reducing The Payroll Tax, Which Has Been Written About Recently, Would Accomplish That…”“MR. KUDLOW: All right. Let me go to a couple of other things. We had Senator Thune on last night about ending TARP, putting a stake in TARP by the end of the year. But Mr. Kyl, let me just ask you. Suppose you got $300 billion from ending TARP. Wouldn't it be better to give it back to the taxpayers in the form of lower tax rates? Wouldn't that be a terrific thing with 10.2 percent unemployment, kind of "we, the people," the government works for us, and they could use the extra cash right now and maybe some incentives on lower rates for payroll taxes?

SEN. KYL: Yeah. As a matter of fact, the original intent here was that when the money was paid back by the banks, you didn't create a revolving account there, you lowered the debt. That is to say, you simply retired that aspect of the debt. Remember, this is all borrowed money from the Chinese and elsewhere. So you can do one of two things with it. You can either retire the debt, or what you're suggesting here is that you can do some things to stimulate job creation and certainly something like reducing the payroll tax, which has been written about recently, would accomplish that. There are other ways you can do it as well.”  [CNBC, Kudlow Report, 11/20/09]

Sen. DeMint

11/29/11: “Republican Leaders Said Tuesday They Would Join Democrats In Supporting An Extension Of The 2011 Payroll-Tax Cut Despite Some Reluctance Within The GOP, Virtually Assuring That American Wage-Earners Will Continue To Receive The Benefit Next Year…..Mr. DeMint Said He Would Support The Extension Because ‘I Just Don't Think It's A Good Time To Increase Any Taxes.’”  “Republican leaders said Tuesday they would join Democrats in supporting an extension of the 2011 payroll-tax cut despite some reluctance within the GOP, virtually assuring that American wage-earners will continue to receive the benefit next year. Republicans still oppose Democrats' plan to pay for the tax break with a tax on people earning more than $1 million a year. GOP leaders said they would find another way to pay for the tax break and predicted it would pass. ‘I think at the end of the day, there's a lot of sentiment in our conference—clearly a majority sentiment—for continuing the payroll-tax relief that we enacted a year ago in these tough times,’ Senate Minority Leader Mitch McConnell (R., Ky.) said. Republicans and some economists have questioned the value of the payroll-tax break, saying its economic impact is limited by its temporary nature and the fact that some people use the spare cash to pay down debt, rather than buy things. Some argue Congress should revamp the whole tax code rather than temporarily reducing individual taxes. ‘I think it's a mistake to do this little tax and that little tax,’ said Sen. Jim DeMint (R., S.C.). ‘We need to reform our tax code if we're going to be competitive internationally.’ Nonetheless, Mr. DeMint said he would support the extension because ‘I just don't think it's a good time to increase any taxes.’” [Wall Street Journal, 11/30/11]

Sen. Kirk

9/10/11: AP: “Kirk Said Obama's Proposals To Cut The Payroll Tax…Should Receive Quick, Bipartisan Action.” “Republican Sen. Mark Kirk said Obama's proposals to cut the payroll tax and approve trade agreements with South Korea, Colombia and Panama should receive quick, bipartisan action.” [AP, 9/10/11]

Sen. Blunt

7/8/10: Pulaski County Daily: “Blunt Agreed That A Payroll Tax Holiday, A 100 Percent Depreciation Of Capital Expenses, And Other Ideas Could Have Worked To Stimulate The Economy…”  “Blunt agreed that a payroll tax holiday, a 100 percent depreciation of capital expenses, and other ideas could have worked to stimulate the economy, but said the $800 billion federal spending plan happened in 2009 because President Barack Obama has a fundamentally different view of how to help the economy than most Republicans and many rural Americans.” [Pulaski County Daily, 7/8/10]

Sen. Johanns

11/30/11: New York Times: “Another Republican Senator Has Opened The Door To Tax Increases On High Earners As A Way To Pay For A Payroll Tax Cut, Showing More Movement In The Party Ranks After Resistance All Year To Tax Increases. ‘I Sense A Change In Mood,’ Senator Mike Johanns, Republican Of Nebraska, Said Wednesday.  ‘It’s A Little More Bipartisan. My Position Has Always Been, ‘Let’s Not Raise Taxes,’ But On The Other Hand, I Don’t Want Our Country To Collapses Under A Mountain Of Debt. If That Means Compromise, I Am Going To Do Everything To Get That Done.’” “Another Republican senator has opened the door to tax increases on high earners as a way to pay for a payroll tax cut, showing more movement in the party ranks after resistance all year to tax increases. ‘I sense a change in mood,’ Senator Mike Johanns, Republican of Nebraska, said Wednesday. ‘It’s a little more bipartisan. My position has always been, ‘Let’s not raise taxes,’ but on the other hand, I don’t want our country to collapses under a mountain of debt. If that means compromise, I am going to do everything to get that done.’…Democrats are seeking to reduce the Social Security payroll tax paid by employees by half, to 3.1. percent of wages, a position many Republicans support.” [New York Times, 11/30/11]

2009 Republican Stimulus Proposal Included a Payroll Tax Cut

2/5/09: 40 Republican Senators Voted For The Republican Substitute Stimulus Which Included A Payroll Tax Cut.  On February 2, 2009, 40 Republican senators voted for a McCain motion to consider an alternative Republican stimulus bill that “would have cut income and payroll taxes….” according to the Associated Press.  The motion was rejected 40-57. [Senate Roll Call Vote #45, 2/5/09; AP, 2/5/09]

  • 18 Republican Senators Voted Against Both Payroll Tax Cut Extension Bills On December 2, 2011 But Voted For A Payroll Tax Cut On February 5, 2009: Alexander, Burr, Chambliss, Coburn, Cochran, Corker, Cornyn, DeMint, Graham, Hatch, Inhofe, Isakson, Johanns, Kyl, Roberts, Sessions, Shelby, And Thune.  [Senate Roll Call Vote #45, 2/5/09; Senate Roll Call Vote #219, 12/1/11; Senate Roll Call Vote #220, 12/1/11]
  • 10/15/09: Sen. McCain: “Mr. President, Earlier This Year I Put Forward A Proposal To Eliminate The 3.1 Percent Payroll Tax For One Year For All Employees In Order To Put More Money In Every Working American’s Pocket During These Difficult Economic Times.  This Would Have Been A Real Stimulus To Our Economy.” “‘Mr. President, earlier this year I put forward a proposal to eliminate the 3.1 percent payroll tax for one year for all employees in order to put more money in every working American’s pocket during these difficult economic times.  This would have been a real stimulus to our economy.  Unfortunately, every Democrat in this chamber voted against this common sense proposal. ‘The regressive payroll tax oppresses all Americans, especially young men and women, and burdens small businesses that must match the tax that their employees pay.  About 41 percent of Americans have no income tax liability.  But every wage-earner is hit by the payroll tax no matter how much or how little one earns.  For 86 percent of all working Americans, the payroll tax they pay is more than their income tax liability.” [Sen. John McCain – Floor Statement, 10/15/09– video available via C-SPAN]
  • 3/26/09: Sen. McCain: “Our Proposal Would Have . . . Put Money Immediately Back Into The Hands Of All Americans Through A Payroll Tax Holiday.” “Our proposal would have helped fix the housing crisis, invested in our nation’s infrastructure through effective and restrained spending, put money immediately back into the hands of all Americans through a payroll tax holiday, and allowed businesses to keep more of their profits to hire new employees, invest in capital and expand their businesses.” [Sen. John McCain – Remarks to the Heritage Foundation, 3/26/09
Dan Pfeiffer is White House Communications Director
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