GOP Drops Demand For Offsetting Payroll Tax Cut [View all]

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GOP Drops Demand For Offsetting Payroll Tax Cut

Brian Beutler

Facing emboldened Democratic negotiators and a thin calendar, House Republican leaders have offered to extend the payroll tax holiday through the end of the year without paying for it.

“Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the ‘doc fix,’” said GOP leaders in an official statement Monday afternoon.

The development represents the GOP’s concession to legislative and political reality.

Republicans are poised to become the face of a middle class tax increase if the holiday expires. Democrats, aware they hold the upper hand, have refused to finance the tax cuts on GOP terms. That’s left Republicans with three bad options: pay for the payroll cut at least in part by raising taxes on wealthy people or corporations; pay for the cut using budgeting techniques Republican rank and file members abhor; or don’t pay for them at all.

Given the GOP’s long-standing view that tax cuts for high-income earners need no offsets, they ultimately settled on option three.

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