Who has the power in Washington? Who won the payroll-tax battle? Not Republicans, not Democrats — government employees.
The new deal on the payroll-tax extension (which will do little or nothing to benefit the economy) was held up by a largely unrelated matter: requiring federal workers to contribute more toward the costs of their own pensions. (More, Congress? How does 100 percent strike you?) The original proposal would have required all federal workers to bear more of the costs of their own retirements, but Democrats representing Maryland, that tony little suburb of Leviathan, shrieked. The compromise instead will cover only new hires.
I’m still tickled that the Obama administration’s great political victory here is getting Republicans to agree to a stupid tax cut with no offsets — stupid tax cuts with no offsets being a Republican specialty — but the outcome is grim: The combination of stupid spending and stupid tax cuts is a potent one, and it may be an indicator of worse things to come. If we should revert to the Bush-Hastert-Pelosi model, in which Republicans and Democrats simply swap tax cuts and spending increases between themselves to keep the machinery moving, the consequences for our national debt will be, in a word, terrifying.
But as the ship takes on water, you can bet that federal workers will continue to loot the fisc until the last rapidly depreciating U.S. dollar has been spoken for.
The Republicans did not really have a choice but to capitulate here.
After all, they had no intention of requiring that a further extension of the Bush tax cuts be paid for. So, requiring it in the context of payroll tax cuts seems awfully inconsistent. Requiring that tax cuts that primarily benefit the middle class to be paid for with spending cuts while not having the same requirements for tax cuts that primarily benefit the wealthy was not really a sustainable position for Republicans. The arbitrariness of the "principles" applied was just too obvious.
You know what would be nice? If Democrats and Republicans could agree to address the deficit in a fair way that neither side particularly liked. This means spending cuts that Democrats don't like and tax increases that Republicans don't like.
It will eventually happen. But probably not anytime soon.
In the meantime, if Democrats and Republicans manage to not do anything to ruin what looks like a possible economic recovery, that would major progress right there. Let us also keep our fingers crossed that problems in Greece and elsewhere in Europe do not destabilize the world economy and derail our own recovery. One thing that is known for certain is that our current Congress is far too dysfunctional to actually handle an economic crisis. It can barely tie its own shoes.
Reply to this commentLinkReport AbuseSince the payroll tax is regressive (and therefore evil, according to the left), cutting it would especially benefit the 50% of income earners that already pay no income tax. NOT the middle class. And that's exactly the Democrat base.
Reply to this commentLinkReport Abuse"Tax increases that Republicans don't like?" That means increasing the already too steep progressivity of the income tax, so that 75% of income workers don't pay it, thereby increasing the Democrat base by half.
Too clever by half, Mr. Welker.
The Dems want to spend like drunken sailors. The Repubs don't want tax increases on high earners. Nobody wants tax increases on anyone else. For the most part, both have gotten their way, and the result is our unimaginable debt and deficits. Voters should reward candidates who will protect the future, not just pander to the present. The out-of-control spending must stop.
Reply to this commentLinkReport AbuseI have to ask you something: Do you honestly believe that raising taxes (no matter what the percentage or actual dollar amount) would result in paying down the debt?
I don't believe that any lucid person seriously believes this to be true. We all know that the additional tax revenue would simply be spent. The only way to reduce the deficit, and ultimately the debt, is to cut. And I mean cut.
Thinking that a "balanced approach" is a realistic solution is proof that one is not serious.
Reply to this commentLinkReport AbuseWell, I believe that raising taxes can make the deficit get smaller. It could give you a surplus. Not only that, cutting them almost certainly gives you deficits and debt. Just ask Bill Clinton. And George Bush (both of them to use as opposite examples).
There is no doubt that the government fiscal mess we are in today is directly attributable to the Bush tax cuts. You're supposed to sustain your surpluses in good times so when the bad times hit, you can deficit spend in case there is a liquidity crisis. We were supposed to be out of debt in 2010 on a glide path. Somehow we got off that.
Reply to this commentLinkReport AbuseCorrection Sir....it hardly has anything to do with the Bush tax cuts and you've neglected how some of these tax cuts get offset because of the positive stimulus that tax cuts have on the economy.
Review the actual numbers: Growth in entitlement spending directly attributable to the retiring boomers is the single greatest threat to our debt and economy.
Under Pres. Bush the deficit was indeed decreasing through most of his 2nd term (long after the tax cuts were in effect).It skyrocketed at the very end because of the financial collapse in September of 2008, which rocked the economy. The financial collapse obviously had nothing to do with the Bush tax cuts or quite frankly, even the Bush Administration. Its causes stem back to policies enacted in the late 70's, which the Bush Administration actually fought against, only to be blocked by some Democrats.
Reply to this commentLinkReport AbuseI wish that we Conservatives could have a serious debate about TARP-type bailouts. I don't think that TARP did the economy any good, but it did give Obama some cover for his massive, and apparently permanently rising, increase in government spending.
Reply to this commentLinkReport AbuseAnd there are going to be more bailouts, because politicians - both parties - still don't agree with me (or won't admit it if they do) about their ineffectiveness.
Yes, its funny how "shared sacrifice" is determined to be only focused on the rich, not those government employees who, over the last couple of decades, have done extremely well in pay, benefits and pension relative to the private sector.
Where is the sacrifice by this HUGE economic sector? At any level; state, municipal or federal? Sure, some low level, new, teachers or cops have been laid off here or there but those cuts have been marginal, at their worst.
In my state there are dozens (at least) of public sector cops, politicians and other "average" employees retiring with six figure pensions. This means they are, in net present value terms, pension millionaires (and multimillionaires). Isn't being a "millionaire" anymore someone who is "rich"? Is normal public "service" work supposed to make people "rich"?
Reply to this commentLinkReport AbuseDozens? Really? Is that the best we can do? No offense, I understand public sector pensions, especially at the state and local level (not so much at the federal level as most of their retirement is a 401k-like vehicle), but dozens? And no, being a "millionaire" isn't really rich, nor is having a $100k/year income.
Reply to this commentLinkReport Abuse600,000 public sector jobs lost since the beginning of the Obama Administration. Don't make up your own facts when you don't know what you are talking about.
Agreed on state and local pension reform though - the formulas used to calculate retirement are open to abuse (counting salary other than base for pension purposes and allowing full retirement, linked to inflation at 55). That's particularly bad in the northeast. Got it. We need to fix it. But have you seen how much money teachers make? It really isn't that much. And they have a tough job. No one is getting rich in the public sector - although they might get a nice pension.
If you are up in arms about state and local pensions, what do you think of military pensions at age 38?
Reply to this commentLinkReport Abuse"No one is getting rich in the public sector."
The superintendent of schools in Lower Merion, Pa., population 60,000, 40 percent of the kids in private schools, is paid in excess of $200,000, last I checked. The city manager of Lubbock, Texas, is paid well into the six figures. Philadelphia police detectives earn six-figure incomes. Some 420,000 employees of the federal government earn more than $100,000. And 27 employees of the (relatively obscure) NCUA earn more than $200,000.
Reply to this commentLinkReport AbuseThe salaries for entering policemen and teachers are largely market determined. Unions would prefer they be even lower, for that serves to reduce the quantity of labor supplied, leaving a bigger pot (fisc?) for their more senior members. Non-union executive salaries rise, too, because they're required to be higher than than those of the workers they supervise. Besides, most of those executives are former union members, and are very sympathetic to the cause (no wonder).
Reply to this commentLinkReport AbuseAlso, in the interests of accuracy (especially if you're going to throw around "don't make up your own facts"), that 600,000 lost public-sector jobs number is correct, but for another country: the United Kingdom. In the United States, there were about 180,000 public-sector jobs lost net, all of them at the state and local level; the federal government added employees during that period.
Reply to this commentLinkReport AbuseLoot the fisc, besides being a great name for a rock band, may be the single best phrase by which this era is described.
Reply to this commentLinkReport AbuseThe GOP, IMO, lost the political war in failing to let the Bush tax cuts expire. Letting ALL the Bush tax cuts lapse would accomplish several things:
1.) It broadens the tax base.
2.) It forces the middle and lower in comes to foot more of the bill for their entitlement demands, creating the real choice of higher taxes for more benefits vs the false choice of lower taxes and more benefits.
3.) If it's unpopular and painful you can blame the democrats.
4.) It might raise 300B or so in additional revenue annually, laying bare the nonsense that we have a revenue problem. "Okay Mr. President: there's your tax hike. Only 900-odd billion to go. What do you plan to cut?"
Cynical politics? Yep. But where has naive stupidity gotten the GOP?
Reply to this commentLinkReport AbuseSam,
I absolutely love your comment. Especially the part about "where has naive stupidity gotten the GOP".
I have for some time had the nagging feeling that the GOP isn't truly an opposition party, but is only supposed to LOOK like an opposition party. That's how it works in Russia. The opposition parties were CREATED by the party in power.
Maybe I'm the cynical one now.
Reply to this commentLinkReport AbuseThere's something about the US Congress that makes "naive stupidity" seem contagious. And it may not be either naive or stupid - it may simply be a result of excessive concern with personal political power.
Reply to this commentLinkReport AbuseFrom over here in the cheap seats, the "payroll tax cut extensions" are just a ploy to obfuscate unending unemployment benefit extensions.
Reply to this commentLinkReport Abuse"Loot the Fisc?" Kevin Williamson should be ashamed of himself!! As a federal employee, I am extremely offended.
I am a middle-class person w/2 small kids and a wife who's a homemaker; I have a Bachelor's in Accounting and a Masters'. I am far from rich and am barely saving enough for my kids' future. We are not exorbitant & we put away every dime we can save to send them to college some day. Our home was purchased 5 years ago and is way underwater for no fault of our own and naturally that's a long-term financial concern. But we've always been responsible, paid our bills, do routine groceries so we can feed our family in a healthy way, rarely eat out and try to give to charity.
All of my peers in the private sector doing similar work make much more than me. I don't begrudge them as they deserve it-it's a tradeoff against the job security & ability to roll over leave time. The latter is very important for those of us with family abroad, which is a major reason I made my career choice.
Mr. Williamson has some nerve to accuse me of theft! It is offensive to me as a professional and it is offensive to my wife and children who depend on my middle-level salary. It feels like a well-to-do man like Williamson who NRO pays to spew divisive hate wishes my kids were malnourished! We did not steal anything! A job was opened up at compensation suitable for me-I applied, was hired and I accepted. That's the way the market works. Mr. Williamson may be more used to the Soviet Union.
I insist that the National Review remove Kevin Williamson immediately for his hateful accusation or NRO will really have a legal problem on its hands. We will have no problem filing a class-action for defamation of character. Divisive hatred against a group of taxpaying middle-class workers and their families will not be tolerated!
Reply to this commentLinkReport AbuseUsing threats to stifle speech you don't like? Yeah you do sound like a government worker. I highly doubt your assertion that people in the private sector doing the same work make more.
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