Republicans may still derail the recovery
I’ve written a lot lately about how Congressional Republicans are rooting for the economic recovery to fail — in fact, it’s central to their electoral strategy. Despite their best efforts, though, the recovery appears to be gathering strength. That’s why they’re resorting to desperate tactics like demanding the Federal Reserve stop trying to improve the economy.
But there’s one potent weapon left in the Republicans’ arsenal: they could kill the payroll tax cut that’s expiring at the end of this month, costing middle-class workers money and weakening consumer demand. More and more, it’s looking like they may actually happen:
Top Democrats are openly calling into doubt the chances that Congressional negotiators will reach an agreement to renew the payroll tax cut before it expires at the end of the month. The culprit, they say, is a deep schism within the Republican conference over whether the the tax holiday is a good policy or just a political gimmick to help President Obama win re-election.
The consequences of failure would result in a typical middle-class worker taking home about $1000 less this year, just as demand is starting to return to the U.S. economy and the unemployed are beginning to find work.
As a fiscal stimulus goes, the payroll tax cut is a weak one. However, it has at least had some effect, and our economy stills needs all the help it can get. Taking this money out of consumers’ hands could do a lot of economic damage. Unfortunately, that may be just what the GOP wants.



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