Payroll Tax Cut Deal Gets the Job Done—but Has Major Flaws

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http://www.thenation.com/blog/166339/payroll-tax-cut-deal-gets-job-done-has-major-flaws

After weeks of laborious negotiations, Congress passed a $143 billion package today to extend a payroll tax cut and unemployment insurance through the end of this year. The payroll tax cut will provide the average household $1,000 this year, a valuable form of economic stimulus, and 5 million Americans will continue to receive unemployment benefits. Taken together, the two measures may boost economic growth by 1 to 1.5 percent of GDP this year.

Both measures were part of President Obama’s jobs plan announced last fall, and Republicans were initially opposed to both. In December, Tea Party legislators in particular raised strong resistance to the idea of extending the payroll tax cut (mainly, one presumes, simply because it’s something President Obama wanted). Congress ended up passing a two-month extension only, and this time around Republican leaders seemed eager to at least extract worrisome concessions from Democrats for a yes vote.

Looking at the final details of today’s package, they failed—with some rather troubling exceptions.

I noted earlier this week that the unemployed could be left out of a deal entirely, and there were also troubling reports that Republicans might otherwise insist on mandatory drug testing and mandatory GED programs for the unemployed. In the end, the GED provisions were scrapped and the drug testing was watered down to simply allowing states to drug test unemployed applicants, not requiring it, and only for those who lost their job due to a failed drug test already or work in an industry where drug tests occur regularly.