GOP caves on payroll tax cut; 10-month extension set to pass
- 10 month extension of the payroll tax cut is likely to pass source
» Good news for Democrats: GOP leadership has indicated that they’ll pass a 10-month extension of the payroll tax without any offsets in spending. Democrats had wanted to balance the tax cut, in part, with higher taxes on the rich; Republicans wanted to do so, in part, with cuts to unemployment benefits. Ultimately, they couldn’t agree, and so it will be passed with no offsets at all. Why is this good news for Democrats? Well, the GOP took a hard-line against the payroll tax cut—which largely benefits the middle-class—last December, making the once-benign policy a partisan issue. Democrats, by and large, were okay passing it sans offsets—the suggestion to pay for it via tax cuts on the rich was more a general effort to increase taxes on the rich—and so the fact that the extension is going to pass is a political and legislative win for Democrats. But the extension expires in ten months—right around the presidential election—so this fight is only over in the short-term.