GOP Payroll Tax Proposal Would Mean Even Bigger Cuts in Discretionary Programs
CBPP issued a report today that takes a close look at the Republican proposal to pay for extending the payroll tax cut. Here’s the opening:
The plan of Senate Republican leaders to extend and expand payroll tax relief includes a smaller payroll tax cut and would provide less than half of the economic boost of the Democratic alternative. The plan claims to offset the costs of its payroll tax cut by freezing federal employee pay and cutting federal employment, but that claim is misleading. The plan actually secures these savings by cutting the overall funds available for defense and non-defense discretionary programs for the next ten years. Senate Republican leaders also say their offset reflects a proposal from the "Bowles-Simpson" commission, but their plan would force discretionary cuts of more than $500 billion more than Bowles-Simpson.
The Senate defeated both the Republican leadership and the Democratic plans last night. With President Obama and many lawmakers committed to extending or expanding the payroll tax cut, however, the contents of both plans remain relevant. With the parties now likely to move toward negotiating a final agreement on the payroll tax, participants in those talks may well raise elements of these plans for consideration.