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As Republicans and Democrats roll out their jobs agendas, they seem to be on pace to agree on virtually nothing. Even scheduling President Barack Obama’s joint session before Congress turned into a war. And with the economy continuing to sputter — last week’s dismal employment report being a case in point — the two parties have intensified their blaming of each other.
Amid the conflict, though, the agenda for Obama and House GOP leaders seems to match up on one key point: They’re both talking about a tax cut aimed at businesses to boost the economy. They agree on where to go, just not how to get there.
Obama has urged Congress to extend the payroll tax cut, having done so as recently as Aug. 20 during his radio weekly address. Many insiders expect his address Thursday to Congress to include the employee payroll tax cut and a proposal to expand it to their employers.
This could dovetail with what House Republicans are proposing.
House Majority Leader Eric Cantor (R-Va.), in an Aug. 29 memo on Republicans’ “upcoming jobs agenda,” proposed a “tax deduction equal to 20 percent of [the] income” of “small business people.”
So Obama and Cantor favor tax cuts aimed at businesses, but there is still a significant gap between how they want to design their tax cuts.
Democrats prefer the payroll tax cut because it benefits millions of Americans whose incomes wouldn’t benefit from cuts to the income tax rate.
They also say money in the pockets of those in lower-income brackets is likely to be spent more quickly.
Republicans say that because the payroll tax cut is explicitly temporary, job creators don’t plan and make hiring decisions based off of it like they would a change to tax rates.
“Targeted relief for small-business people/employers makes it easier for them to retain current employees and hire new ones by reducing their tax liability. That is more growth-oriented than the payroll tax,” Cantor spokesman Brad Dayspring said.
Gene Sperling, director of the White House National Economic Council, seemed to embrace both approaches in a Bloomberg Television interview Friday, saying, “We are looking at all different options. … It will focus on tax cuts that will help workers as well as small businesses.”
But insiders say any talk of tax cuts faces major hurdles. How will it be financed? What is the legislative vehicle? And what is the relationship of such a proposal to the bipartisan Joint Committee on Deficit Reduction, which gets down to business this month in earnest?
“We just finished with this huge, gut-wrenching fight over raising the debt ceiling and reducing deficits,” said Ken Kies, managing director of the Federal Policy Group and a top tax lobbyist. “Are they going to pay for this tax cut? If not, that’s a problem. … But any tax increase to pay for what’s proposed is not going to be received well by House Republicans.”