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The GOP Payroll Tax Plan Doesn't Stink

The Republicans have weighed in with their payroll-tax plan. I don't have a lot of details, and I have consulted with no experts about what I see online. But at first glance it seems like something the Democrats can (or should, anyway) actually work with. It doesn't, for example, say a word about extending the Bush tax cuts. That's progress.

Here's what they put on the table:

1. Extend payroll tax cut. Not as good as the White House proposal to extend and expand the payroll tax cut. But I'll take it if they include extending jobless benefits.

2. Means test government benefits (Medicare, unemployment insurance, food stamps) for incomes above $1 million. Do millionaires collect unemployment benefits and food stamps? I kind of doubt many do. But sure, if the Republicans want to end this probably nonexistent abuse, be my guest. Republicans should feel free to add that space aliens and zombies should also be ineligible for these government benefits.

Means testing Medicare would be objectionable if it meant kicking millionaires out of the program, because Medicare's political support and actuarial soundness depend on near-universal participation among people over 65. But if the Republicans are merely talking about raising premiums on millionaires, well, why not? If Republicans are talking about raising premiums on millionaires all the way up to what it costs the federal government to provide them health insurance, I probably wouldn't go that far, because that might chase millionaires out of the program and back into the private market. But we could certainly raise premiums on millionaires. We might even be able to raise premiums on millionaires by a lot. The Republicans are bending themselves like a pretzel not to call this a millionaire tax, but guess what? It's a millionaire tax.

3. Freeze government civilian salaries and reduce the size of government. I'm gonna go with a reluctant yes to the first and a maybe to the second. A cherished myth among conservatives is that the federal workforce has gotten bigger since the Great Society. Actually, it's gotten smaller. Even when you count just the civilian side it's just a smidgen bigger than it was in 1962. What's gotten bigger is the government workforce at the state and local level.

I don't know how conducive to cuts the federal workforce is at present. A lot would depend on where you wanted to cut. The Republicans exempt military personnel from the cut, which is a little like saying you're traveling to Pisa but you don't care to see the leaning tower. The Pentagon is the single biggest federal employer. The uniformed military accounts for more than one-third of the total. So if you're serious about cutting the size of the federal workforce you have to shrink military personnel.

4. Allow millionaires and billionaires to voluntarily contribute to deficit reduction. This is a juvenile dig at Warren Buffett, but sure, whatever.

5. No tax hike on job creators. Patently untrue. Although many millionaires who are eligible for Medicare are retired, and therefore out of the job-creating business, I would guess the majority are not. Any millionaire who remains in the workforce is, by the GOP definition, a job creator, right? That's the Republicans' stupid conceit, not mine. And taking away some or all of that job creator's Medicare subsidy is a tax. No, it's worse than that. It's a progressive tax. But because it's a tax, I don't see why Democrats should object to it (with the caveats mentioned above).