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December 26, 2011 09:10 PM UTC

Who Lost The Most In GOP's Payroll Tax Cut Debacle?

  • 26 Comments
  • by: Colorado Pols

AFP reports:

Obama’s triumph will help erode a damaging impression among some supporters that he has failed to be sufficiently tough with Republicans. “In purely political terms, it is a clear victory for President Obama and the Democrats,” said Thomas Mann, a senior fellow at the Brookings Institution in Washington…

While Republicans are generally seen as the party of lower taxes, Obama was able to paint himself as the champion of a tax cut opposed by his rivals.

A new Washington Post/ABC News poll found that 46 percent of Americans now trust Obama most on taxes, while 41 percent backed congressional Republicans.

A CNN poll last week put Obama’s approval rating at 49 percent, up five points over the last month, helped by improving sentiment among the middle class voters the president needs to win reelection.

There’s no question that the battle over the extension of the payroll tax cut ended as a significant victory for Democrats–an outcome that wasn’t all that likely only two weeks ago as Republicans were gaining the upper hand in forcing concessions. The short-term extension of the payroll tax robs the GOP of a favorable negotiating position they enjoyed after Democrats dropped a “surtax” proposal on the highest income earners to pay for the full one-year extension. When the public tunes in next year with polls favoring the “surtax,” this could prove a major setback.

Perhaps more importantly, turning the negatives in this battle solidly against House Republicans could do lasting damage to the campaigns of many incumbent members of Congress–very prominently including Colorado, where two incumbent Republicans now face tight battles for re-election in competitive districts. Freshman Rep. Scott Tipton declared the compromise “unworkable,” then was forced to sheepishly declare it acceptable after all. Rep. Mike Coffman was likewise ensnared, getting special attention from Democrats after joining the vote to kill the Senate compromise despite his apparent wavering the day before. It’s worse for Coffman and Tipton due to their relative vulnerability than for Rep. Cory Gardner, who seems more concerned with positioning himself in the budding rivalry between Speaker John Boehner and Majority Leader Eric Cantor than providing cover for his more-vulnerable peers.

And Rep. Doug Lamborn was reportedly “absolutely” fine explaining a potential tax hike to his constituents throughout the whole mess. Now that, folks, is the power of a safe seat.

We said before that the GOP’s wholesale defeat in this battle over their signature issue could mark a political turning point for the 2012 election cycle. Much depends on the outcome of the next round of negotiations over the longer-term extension. But the conflicted loyalties and weakness revealed on the strongest issue the GOP has, the major discussion item at Christmas dinner tables around the nation this past weekend, is going to reverberate next year–especially in the races where the couple of points it’s realistically worth could make the difference.

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26 thoughts on “Who Lost The Most In GOP’s Payroll Tax Cut Debacle?”

  1. Obama heard our David, finally.

    From the LA Times:

    Until recently, the main Democratic response was that although Obama’s stimulus plan and other measures had not cured the economy, they had averted another Great Depression. But party strategists concede that as a slogan, “could have been worse” is more likely to win support among economists than average voters.

    So increasingly, Obama and his aides have switched to a longer view, trying to focus attention on what they portray as the president’s defense of the middle class. That positioning, they hope, will set up a helpful contrast with his November opponent.

    “This isn’t just about recovering from this recession,” said a senior advisor to Obama, one of several who spoke on condition of anonymity because they were not authorized to speak publicly about internal White House discussions. “This is about saving the middle class from a decline that’s been going on for three decades.”

    Positioning his campaign as defending the Middle Class vs. the GOP’s “All for 1(%), None for You!” seems to be a fairly safe bet.

    Reintroducing the Millionaire Surtax to the negotiations for the full year extension of the payroll tax cut would be a perfect way to highlight this new strategy.  Either the GOP folds, or if Obama loses that battle (assuming he actually fights for it), then painting the GOP as obstructionists in defense of the One Percenters will be a win too.

    2. Just to be clear: the proposed Millionaire Surtax would be 1.9% on taxable income over $1 million. That equals, for example, $19,000 on $2 million of taxable income.  Oh, the humanity!!

      Dems need better messaging (heard that before?).  They can start by pointing out what I just did.

        1. Let’s take my example a little further:

          Take a minimum wage earner @ $7.25/hour working 2,080 hours a year (full-time, no vacation) = $15,080/year.  Even after the 2% payroll tax cut, that worker pays 5.65% of his gross income on FICA taxes.

          A person earning $2 million pays $33,485 in FICA taxes, even after the Millionaire Surtax.  That equals only 1.67%.

          So, rather than paying nothing, the minimum wage earner actually pays more than THREE TIMES the FICA taxes than the multi-millionaire.

          Wouldn’t it be nice to see Senator Michael Bennet present a chart like this on the Senate floor and get as much attention as his chart on how unpopular Congress is?

          1. if your minimum wage earner would just invest more then he might use the capital gains rate like Warren Buffet and the dude from Oklahoma that knows all about natural gas

      2. They need to make clear that this isn’t about a tax on millionaires, meaning those worth a million or more, at a time when many not fabulously wealthy people fit that description between home and maybe small business or family farm value or the life savings they’ve acquired for retirement.  It’s about a small tax increase on income for those who personally earn more than a million in a single year, quite a different and much tinier elite.

        I don’t think Dems have been very good at making that clear and that allows Rs to scare many garden variety prosperous people who have never and will never make anywhere near a million in a year. Thanks Caroman.    

        3. While chatting with an old friend yesterday, the topic came up.  So I explained to this multi-millionaire CEO/Entrepreneur that if she makes $1 million income in a year, the marginal tax increase would be Zero.  If she makes $2 million, she’d have to cough up an extra $19k.  Initially she wasn’t sure if it was asset-based or income based.  

          Once I explained it, her reaction was: oh, no big deal, then proceeded to regale my wife and me with stories from her latest photo safari trip to Africa.

  2. if Democrats would point out the obvious extortion tactics of Republicans where every piece of legislation is treated like a Middle Eastern bazaar with haggling over things like defunding the EPA that have nothing to do with the legislation being considered.

    Republicans load up every bill with poison pill provisions then proclaim that it is Democrats who don’t want this or that.  Democrats should promote voting on single issue bills and denounce any subsequent attempts at hostage taking.  

    1. The “One Baby Step For Dems, Two Giant Leaps For The GOP” approach to negotiations over every Congressional bill has to stop.

      The offensive riders the GOP loads up on unrelated bills need to have bright lights constantly focussed on them to make it abundantly clear just what the GOP is up to.  

      Subtlety just doesn’t work in this current atmosphere.  Yet to be seen is if the media will cover that part of the story too.  

  3. As of today: Paul 22.3%, Romney 21% and Newt 14% according to a newscast I just saw on CNN.  That’s a big drop for Newt.  The :30 seconds didn’t go into the 2nd & 3rd tier and there was no mention if the poll was the general population of R’s or potential caucus goers only.

    3. Who don’t sit around collecting annuities and dividends.

      Who have won–so far? Social Security collectors. So far. So far the Dems haven’t caved on SS. So far.

  5. Democrats are the party of low taxes now! Didn’t you hear?

    I said it before and I’ll say it again: the payroll tax fight showed that Democrats lack principles, not Republicans. Just because you scored a basket on the road doesn’t mean you suddenly have the high ground on the issue of taxes. That’s laughable.

    1. The blatant contrast between Republicans saying it wasn’t necessary to pay for the Bush tax cut extension but it is necessary to pay for the payroll tax cut extension exposes a huge pressure point that Democrats get to poke at again in the next two months.  We’ll also have the opportunity to revisit the Bush tax cuts in next year’s budget debates, as well as the capital gains rates.  That will be, IMHO, “fun”.

      I don’t think Democrats have gained a high ground here – only the opportunity to capitalize on a Republican failure in messaging and caucus control.

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