The outcome of the impending payroll tax imbroglio seems to be clear. With Republicans offering spending offsets and Democrats demanding tax increases, my safe premonition is that, for better or worse, the simple tax cut extension will pass, albeit without either "offset" plan. Due to some divisions among conservatives, such an outcome seems to be intractable at this point.
At this point, we
must focus on unemployment benefits with a unified message. My concern
is that all of the proposed GOP packages conflate the passage of the
payroll tax cut with UI extension. We all know that Democrats will
abjure all Republican proposals to pay for the package, most notably,
cuts to the federal workforce. The only thing this package will do is
telegraph a public message to Democrats and the voters that Republicans
agree to the premise of extending unemployment benefits.
clock winds down toward Christmas break, and Democrats balk at spending
offsets, Republicans will once again be forced to acquiesce to yet
another aspect of Obama's Santa Claus stimulus package. Worse,
conservatives who want to support the tax cut will be forced to vote for
a package of unprecedented UI benefits – without any offsets or
structural reforms to the program. By voting for the full package,
conservatives will be going on record as supporting UI extension. Then,
the offsets will be jettisoned from the deal by Democrats, forcing
conservatives into a no-win situation on the last day of the session.
At the very least, the GOP proposal for UI must be decoupled from the payroll tax bill.
Earlier this week, we laid out the case
why Republicans should oppose the entire premise of a 99-week UI
extension, irrespective of spending offsets. They must make it clear to
Democrats that they will not pass an extension unless consequential
structural reforms are made to the program. Any serious reform must
restructure the program to resemble the insurance plan that originally
characterized the program, instead of a new mandatory unfunded liability
that resembles more of a European style welfare plan. Reforms that
focus on pocket change from the few millionaires or prisoners who
collect UI are non-sequiturs.
Republicans should pass a standalone
UI reform bill, and make it clear to Democrats that it is their bottom
line. Then they should go home.
As the program is currently
constituted, it must not be extended. Conservatives understand that we
won't come away with everything from the end-of-year legislative
fights. Nonetheless, we should not walk into a trap of bundling tax
cuts with the creation of a defacto permanent entitlement program.