economy | Danny Vinik

Gallup is out with a poll today on political reform. Here are the results:
Obviously, a national referenda isn’t going to happen. But if we did, it would clearly show that the vision most Americans have for their government is not realistic.

For instance, a Pew poll in February found that 70% of Americans, including 65% of Democrats, wanted the President and Congress to act on deficit-cutting legislation this year. But another Pew poll released just a day (PDF) later found that Americans don’t want to cut any individual programs except foreign aid (to the right).

Of course, it’s not that surprising that no one wants to cut any of those programs. They all sound very useful. But how are we going to reduce the deficit – as voters say they want – if we don’t cut anything. Well, how about we raise taxes? I’m very confident in saying that if we put tax increases up for a national referenda, it would lose badly.

Here we get to an impasse. Voters don’t want to cut individual programs, don’t want higher taxes but want to reduce the deficit. Those three things together are not possible. In the mean time, voters get angry when spending cuts pass (they don’t like the sequester), hate higher taxes (remember how hard it was to raise taxes on the richest Americans?) and are demanding cuts to the budget deficit. One party demands spending cuts, the other wants higher taxes and both clamor about the budget deficit. This all stems from a fundamental misunderstanding of the capabilities of the US government.

Maybe a national referenda is just what we need – at least then Americans would have a better understand of what its government can and cannot do.

The last time I wrote an article asking for the President to extend the payroll tax cuts I didn’t use all caps in my title. So here’s try #2. I’m also angrier this time.

Here’s the President today talking about a potential deal on the Fiscal Cliff:

Here are the two lines that stuck out (and infuriated me):

Every American’s paycheck will get considerably smaller.

And:

The housing market is recovering, but that could be impacted if folks are seeing smaller paychecks.

Guess what is immediately going to hit the middle class the hardest?

The expiration of the payroll tax cut.

I’ve supported the President against other liberals in his desire to compromise, but he never mentions the payroll tax cut. The Bush Tax Cuts don’t have an effect for months – until tax filing season. The sequester happens slowly over time. We won’t hit the debt ceiling for another month. But the end of the payroll tax cut is going to hit middle class families right away. That’s what’s going to hurt their paychecks.

The President is saying that he wants to avoid decreasing every American’s paycheck. He’s demanding just a small deal and at worst, just an extension of the Bush tax cuts for those making less than $250,000 and an extension of unemployment benefits. That’s what Obama is saying Congress needs to do to prevent every American’s paycheck from taking a hit.

He’s wrong. That still leaves a big weekly hole in every American’s paycheck as the payroll tax rises from 4.2% to 6.2%.

Matt Yglesias mentioned this in a post today as well. The parts of the fiscal cliff that have the worst immediate consequences aren’t even being mentioned.

It’s a major political failure. But it’s also a media failure? Hello MSM, where have you been? Do most Americans even know that the payroll tax is going up?

The entire thing is infuriating, but nothing is going to change in the next few days so I might as well get used to it.

Danny Vinik

Tag economy

Let’s Have a National Referenda on Key Issues

EXTEND THE PAYROLL TAX CUT!