The Alternative Minimum Tax patch. Tax Extenders. The Doc Fix. Unemployment Insurance extensions. These are all Washington-insider terms for pricey tax and spending policies that no one can bother to find a way to pay for during the rest of the year, but every December, just as each is about to expire, both parties come together and continue them anyway, thus adding billions to our deficit every Christmas.
Not only will this year be no different, but now the parties have conspired to add another big ticket item to this list: payroll tax cuts. President Obama initiated this new tradition last year when he insisted on including $111 billion in payroll tax cuts in a December tax deal that also included the usual tax extenders, AMT patch, and a two-year extension of the 2001 and 2003 Bush tax cuts. None of the spending bills have were offset by spending cuts elsewhere.
But now Senate Democrats want to more than double the payroll tax cut to $265 billion and make up for the missing revenue by creating a new permanent surtax on millionaires. Republicans initially opposed the proposal, and they still oppose the new surtax, but Republican leaders signaled yesterday they will agree to the payroll cuts. “I just don’t think it’s a good time to increase any taxes,” Sen. Jim DeMint, R-S.C., said.
Both sides are still insisting this payroll tax cut is only temporary, but so was the AMT patch, and the doc fix, and the tax extenders. Unemployment is expected to be above 8% for the foreseeable future. Which politician in either party is going to want to advocate raising taxes on the middle-class by $265 billion while unemployment is so high? This payroll tax cut is here to stay.
Around the Bigs
The Wall Street Journal, U.S. Nears Milestone, Net Fuel Exporter: A combination of booming demand from emerging markets and faltering domestic activity means the U.S. is set to export more oil than it imports in 2011. “It looks like a trend that could stay in place for the rest of the decade,” said energy trader Dave Ernsberger.
The Washington Post, Despite earmark ban, lawmakers try to give money to hundreds of pet projects: Members of the House and the Senate attempted to pack hundreds of special spending provisions into at least 10 bills in the summer and fall, defying a commitment by Republican leaders to ban the practice. None of the spending bill have yet become law, so it is impossible to tell how successful these efforts were.
The New York Times, Line Grows Long for Free Meals at U.S. Schools: The number of students receiving subsidized lunches rose to 21 million last school year from 18 million in 2006-7, a 17 percent increase, according to Department of Agriculture data.
The Wall Street Journal, American Lands in Bankruptcy: Due to higher than expected fuel costs and generous union contracts, American Airlines declared bankruptcy yesterday. The airline will continue to operate as a bankruptcy court reorganizes the company’s debts.
The Washington Examiner, State spending spikes 11 percent in Md., 7 percent in Va.: A study by the National Governors Association and National Association of State Budget Officers shows Maryland’s general-fund spending will spike 11.4 percent — the seventh-highest rate nationwide. Virginia’s 7.1 percent spending growth was also above the 2.9 percent average nationwide.
The Los Angeles Times, Police begin making arrests: Shortly before 1 AM, Los Angeles police began making arrests as they evicted Occupy L.A. from outside City Hall.
The Washington Post, Iranian hard-liners storm British Embassy, residential compound: Iranian demonstrators and paramilitary members pillaged the British Embassy in Tehran and a separate residence Tuesday, in apparently deliberate decision by Iranian authorities. The attacks come after Britain took action against the Iranian central bank last week.
The Washington Examiner, Anti-terror operations in Pakistan threatened: Disrupting terror networks along the Afghanistan border is going to be more difficult as Pakistan shuts down intelligence gathering in response to a NATO air assault that left 24 Pakistani army soldiers dead. “Our intelligence gathering capabilities for targeting terrorist networks in the region is not going to go down slowly, it’s just going to plummet,” The Heritage Foundation’s James Carafano said.
Campaign 2012
Cain: After yet another woman came forward with accusations of sexual misconduct, Herman Cain told a conference call of supporters yesterday that he was going “to do an assessment as to whether or not this is going to create too much of a cloud, in some people’s minds, as to whether or not they would be able to support us going forth.”
Huntsman: Speaking to The Boston Globe editorial board, Jon Huntsman failed to rule out the possibility that he would run as a third party candidate yesterday. Asked, “Is there any situation in which you would run for president as an independent?” Huntsman told The Boston Globe, “I don’t think so.”
Romney: Pressed to reject Romneycare by Fox News Channel’s Brett Baier last night, Mitt Romney said, “I’m standing by what I did in Massachusetts. … I’ll defend that and I understand it has political implications. And if it keeps me from winning a primary, so be it. But that happens to be the truth.”
Righty Playbook
The Lexington Institute’s Loren Thompson explains how the Super Congress’ defense cuts could cost Obama reelection.
The Heritage Foundation’s Nile Gardiner asks, “Does Obama Know the Difference between Great Britain and England?”
Megan McArdle explains how union contracts forced American Airlines into bankruptcy.
Lefty Playbook
Talking Points Memo digs up video of Newt Gingrich supporting the individual mandate in 2005.
Liberal bloggers, like Raw Story‘s Megan Carpentier, are upset that Siri, the new iPhone 4 voice-activated assistant, apparently refuses to tell women where they can get an abortion.
The Nation‘s Katrina vanden Heuvel says the left has been too supportive of Obama, and encourages Occupy Wall Street to challenge him.
