[Posted by Karl]
The Wall Street Journal is upset at the way the House GOP is botching the extension of the current payroll tax cut:
The GOP leaders have somehow managed the remarkable feat of being blamed for opposing a one-year extension of a tax holiday that they are surely going to pass. This is no easy double play.
Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter, although he’s spent most of his Presidency promoting tax increases and he would hit the economy with one of the largest tax increases ever in 2013. This should be impossible.
House Republicans yesterday voted down the Senate’s two-month extension of the two-percentage-point payroll tax holiday to 4.2% from 6.2%. They say the short extension makes no economic sense, but then neither does a one-year extension. No employer is going to hire a worker based on such a small and temporary decrease in employment costs, as this year’s tax holiday has demonstrated. The entire exercise is political, but Republicans have thoroughly botched the politics.
Stereotypical Democrat partisans like the WaPo’s Greg Sargent (and the folks at CNN) credit “Obama’s new populist offensive, including the pressure on Republicans over the payroll tax cut,” for the president’s current bounce in the polls. NYT number-cruncher Nate Silver isn’t so sure:
I would suggest that another explanation is much more plausible: Mr. Obama’s improved approval ratings reflect rising economic expectations.
Silver notes that — for now, at least — the topline unemployment rate is down (albeit with troubling details), ” housing starts are up, retail sales figures have been reasonably good, and various regional and national manufacturing indexes are generally coming in above expectations.” Moreover, Gallup’s economic confidence index has at least crawled back to where it was before the debt ceiling fight. Silver then turns to the payroll tax tussle:
This debate over interpreting Mr. Obama’s approval ratings has some implications for the current argument in Congress over the payroll tax cut. If you believe that his improved ratings reflect his outmaneuvering Congress, then perhaps it is to his benefit if the argument extends on past the new year. But if you believe instead that the ratings have more to do with improved economic confidence, this could be a dangerous game. Even if the tax cuts are eventually extended, as seems likely, a temporary decline in Americans’ take-home pay in January would nevertheless represent a disruptive influence at the very moment that Americans are starting to believe in the economy again.
Given that presidents get blamed for bad economies, even under divided government, the Democrats chortling today might want to look at the bigger picture. But they probably won’t, given their unproven belief that policy uncertainty is not a drag on economic recovery.