Image via WikipediaTo use a sports metaphor, barring a last second Hail Mary, it looks like most of us will start the New Year off a little lighter in our wallets thanks to the idiots in DC. I am not signalling out either side in this fiasco, as all parties involved deserve to get a lump of coal in their stockings. Perhaps they should be sent to their rooms without supper. At the very least they should be whipped 100 times with a wet noodle.
Last year at about this same time, Congress and Obama concluded a deal that extended the Bush era tax rates. Along with that, Obama asked for, and received, a 2% payroll tax holiday for 2011. That payroll tax break along with keeping the income tax rates steady came at a most opportune time for me personally. My health insurance premiums, like a lot of folks, went up significantly. The 2% tax break just about covered the increase in my share of my health insurance.
Now, I am all for keeping more of the money that I earn in my pocket as opposed to sending any more to the government, though I have to say I wonder about the practical aspect of cutting the tax that funds social security. We keep hearing about how social security is in trouble because we are spending more than we are taking in. It doesn't seem logical to cut the payroll tax if that is the case. Of course, with 47% of people not paying income taxes, the only thing left for Obama to cut for those folks is the payroll tax so that he can keep buying those votes for the Democrats.
Originally, Barack Obama called for Congress to extend the payroll tax holiday for another 12 months through 2012. Both the Senate, controlled by Democrats, and the House, controlled by Republicans, stated that they wanted to extend the tax break. Unfortunately, neither side could agree on how to pay for it. Once again, they wait until the very last second to try to address the issue. Obama called for Congress to put off their Christmas break until after an agreement was reached.
The Senate proposed a total of three bills that included a 12 month extension, two from Democrats and one from Republicans. All of them failed to pass in the Senate. For their part, the House of Representatives did pass a 12 month extension which Harry Reid and the Senate promptly killed. The Senate then passed a bipartisan bill that only extended the tax break for two months. That bill was voted down by the House which is where we stand today.
After the House passed their bill with a 12 month extension, Boehner took the President's admonition to delay the Christmas break until a deal was reached to heart and kept the House in session, or at the very least on call in case there was a need for a vote on a bill. Harry Reid and the Senate, bolted town as soon as they passed their two month extension. Boehner is calling for the Senate to come back to work things out, but now Obama and Reid are basically saying, "screw you!"
Even though the House passed a 12 month extension, albeit with conditions the Democrats found unpalatable, it will end up being the Republican House that takes the brunt of the negative PR. The Republicans are correct in that a two month extension really doesn't do any good for anybody. The reality is that with a two month extension, we will find ourselves in the same spot in February. It is the Democrat controlled Senate, and supported by Obama, who refuse to come back to work on an agreement. Still, the news media will report it was the Republicans who are responsible for the failure of extending the tax break.