What’s the worst gift you could get this holiday season?
A) A sweater from the Hickenlooper collection.
B) A lump of coal.
C) An unexpected bill for $1,000.
D) All of the above.
We’re going with “C” because, in this economy and with the energy company looking to increase rates, “A” and “B” help keep you warm.
What makes “C,” the unexpected bill, even worse is that it’s not because your spouse or kids rushed out and put an expensive gift on the credit card. It’s because of the partisan divide in Washington.
We’re talking about the divide over what should be the common-sense decision to extend a payroll tax deduction for another year as the economy recovers.
Crafted last year, it reduced the tax paid by employees to 4.2 percent from 6.2 percent through Dec. 31. The tax break is worth an estimated $1,000 to an average family.
President Obama’s $265 billion plan for an extension would cut the rate even further, to 3.1 percent, and cut it in half for employers. He proposes paying for it with a tax on people who earn more than $1 million annually.
Senate Democrats have offered a $185 billion proposal that does not extend the break to employers, but would lower the rate to 3.1 percent. Like Obama’s plan, it would be paid for by a tax on the wealthy.
A Republican plan would have kept the rates the same. But the call to pay for the tax cuts out of the pockets of federal government employees made its shot at passage about as realistic as a visit from the jolly old elf.
This is a debate that shapes up as Democrats looking out for the middle class and Republicans looking out for the rich. Democrats think they win that argument. (They are also happy to point out the irony of those in the GOP who now oppose “tax cuts.”)
In hopes of finding a compromise, it’s fair to say Republicans are going to have to move the most. Their best hope may be to latch onto a bipartisan bill that gives them a small victory on tax and business measures.
Sens. Claire McCaskill, D-Mo., and Susan Collins, R-Maine, have offered one such plan. While it’s too soon to know its price tag, the measure includes several components that the parties can agree upon or that could be used as part of another package.
As a frame for any compromise discussions, we would suggest maintaining the current 4.2 percent rate for another year and asking the wealthiest among us to help pay for it.
While Democrats are likely inclined to keep firing their new political weapon, we would warn of the prospect that they might just “shoot their eye out.” In other words, what’s good for them politically is not always what’s best for the country overall.
As the clock ticks down, both sides should keep in mind a rule of Christmas lists that parents regularly impart on their children: Don’t expect to get everything you ask for; be thankful for what you get.
