Driving the Week: The Payroll “Compromise”

Senate Majority Leader Harry Reid (D-NV) plans to announce a “compromise” offset measure to pay for the payroll tax cut. The original liberal plan was to pay for the tax cut for the middle class by increasing taxes on job creators. Huh? That is literally wealth redistribution; taking money from one group and giving it to another.

The original conservative plan used a suggestion from the Simpson-Bowles deficit reduction plan which would have frozen federal workers’ pay through 2015 and reduced the government workforce through attrition. Both of these original plans were voted down in the Senate last week.

Some liberals have floated the idea of using war savings to pay for the payroll tax cut extension. If using a budget gimmick to “pay for” a tax cut will actually hold down the deficit, then they have a great idea. It won’t, of course, and here is why. War “savings” are defined by Congress as money saved from winding down the war. However, they claim big savings by pretending they are spending at a higher rate on the war and then counting the savings as spending cuts. These aren’t real savings because the money was never meant to be spent in the first place. It’s just another political gimmick, as Politico reports:

“Sen. Kent Conrad (D-N.D.) said the new Democratic plan will be “paid for in a serious way” — an admission that the Democrats’ surtax on millionaires was little more than a political gimmick.”

Sen. Conrad went on to say that the idea will be a “compromise” of the two plans voted on last week. So apparently, tax hikes will still be included.

Another plan being floated by conservatives is to include a restart of the Keystone XL pipeline, which President Obama delayed until after the election in order to keep environmentalists happy, and a repeal of environmental regulations on boilers. Some want to roll in an extension of unemployment benefits, the so-called “doc fix,” and an extension of special interest tax breaks all into this bill, with some to-be-determined offsets.

Heritage Action will stay on top of it all. In the mean time, comment below and tell us what you would do.

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