I don't feel there's enough appreciation out there for how thoroughly the GOP and the conservative establishment have eviscerated their argument against the Democrats' proposed millionaire surtax by promoting a Medicare benefit cut for millionaires.
As I wrote yesterday ("The GOP Payroll Tax Doesn't Stink"), I think the Republicans gave the Democrats a payroll tax-cut proposal that they can work with, and I predict that after the Democrats' (superior) payroll tax proposal fails to become law the White House will be willing to cut a deal. A larger lesson--one I hope that President Obama remembers--is that his strategy of beating up relentlessly on the GOP for protecting the rich and screwing the poor and the middle class seems to be bearing fruit within the realm of governance. I'm not sure even he expected that. There is now solid reason to believe that, one way or another, the payroll tax cut will be extended. There might even be a reasonable chance that the Republicans can be persuaded to extend unemployment benefits, too.
What I'm really struck by, though, is the stark contradiction between the new GOP plan and what Republicans were saying a mere four days ago. In that bygone era Senate Minority Whip Jon Kyl argued that a payroll tax cut was a bad idea because it wouldn't stimulate the economy and because offsetting it with a millionaire surtax would increase unemployment. That's because millionaires in this country are the--say it with me--"job creators." Take money away from them and they'll have less money to create jobs.
The GOP would have you believe that their plan "does not include a single dollar of new taxes on job creators," as their summary of the proposal puts it. "There's ... no reason we should pay for that relief by raising taxes on the very employers we're counting on to help jolt this economy back to life," Senate Minority Leader Mitch McConnell said on the Senate floor. The Republican bill will "achieve the same result, the same relief, without a gratuitous hit on job creators." Grover Norquist's Americans For Tax Reform, which is alleged to pull Republicans' puppet strings on what is and is not a tax, agrees. The GOP plan "doesn't raise taxes on anyone."
This is utter hooey. The Republican plan would require anyone who makes $1 million or more "to pay full freight on their Medicare premiums," McConnell said. As I wrote yesterday, I think making millionaires pay full freight might screw up the program, but I'm all for making them pay more in premiums. The Republicans call this a means test, and it's certainly that. But it's also a tax increase imposed on millionaires. The government would be taking money away from job creators! Well, job creators over 65, anyway.
I recognize that Republicans see a moral difference between a dollar taken away from a millionaire in government benefits and a dollar taken away from a millionaire in taxes. The problem is that the argument Republicans were making until a few days ago wasn't a moral one. It was an economic one: Taking money away from millionaires hurts the economy! End of story. McConnell, Norquist, and Co. can't logically continue to make that argument if their own proposal would ... take money away from millionaires. Same constituency, same transaction--dollars would be sucked out of millionaires' pockets and into government coffers. It makes no difference to the economy--none--if we call those disappearing dollars "taxes" or "reduced benefits." They're dollars. And taking them away from rich people either destroys jobs or it doesn't. The GOP proposal constitutes an admission that it doesn't.