In a surprising change of heart, House Republicans agreed yesterday to extend the $100 billion payroll tax cuts through the end of 2012 without spending cuts to offset the cost. However, the concession may signal a shift in strategy, rather than a cave, on the issue. A December Gallup poll showed that those surveyed trusted Democrats more than Republicans on the payroll tax issue by 41 percent to 34 percent. Republicans can't afford to lose any more traction on this issue during an election year, and their smartest move was to move on.
However, agreeing to pass the payroll tax cut without much fanfare or debate leaves an opportunity to push harder on other benefits expiring at the end of the month-including extended unemployment insurance and Medicare physician reimbursements. Democrats would prefer to push all three programs in one piece of legislation, but if the Senate and House Republicans refuse to cooperate, the Democrats will need to come up with a way to finance the programs without freezing federal salaries.
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Social Security, Medicare, Medicaid, and defense took up 68 percent of the federal budget in 2011, and the number is sure to climb for this year's budget as non-discretionary spending jumps up. As Ezra Klein puts it, "yep, the federal government is still an insurer with a large army."
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Obama's 2013 budget pledges to cut more than $40 billion in tax breaks for oil, gas, and coal producers in the next decade, leaving more funds to spend on alternative energy.
