How the Payroll Tax Wrangling Shows the Shifting of the 2012 Landscape

Josh Marshall at TalkingPointsMemo talks about “inflection points” in terms of political campaigns or debates. Recently, he talked about waiting on the point when Newt Gingrich starts leading Mitt Romney in the Intrade Markets for the Republican nomination. But there is another debate occurring in American politics, and while the details will not be followed outside the Beltway, the overall point will shape the 2012 election.

Congress is now wrangling over completing the spending bills for Fiscal 2012 (which began more than two months ago) and extending the payroll tax holiday and emergency unemployment benefits. House Speaker John Boehner is now complaining that Democrats are holding the government hostage to get the payroll tax cut passed (why Republicans generally oppose this effort, and where the Republicans have now found themselves on tax issues generally, is inexplicable). But of course Boehner does not give a wit about shutting down the government. Republicans have been threatening to do that all year.

But Boehner’s complaint is fascinating. He does not actually think that the Democrats in the Senate want to shut down the government, but he is now deathly afraid that if it were to happen, he and the Republican Party would get blamed for it. He also does not really think there is much chance that the government will shut down, but by invoking the claim of hostage taking, he is trying to reclaim power in the negotiations. (Democrats earlier in the year invoked this claim against Republicans—fairly so—for the same reason.)

But this shows a big inflection point in the 2012 election and the power in Congress. Earlier in the year, a shutdown was viewed as a big problem for President Obama because of its actual harm to the economy. But Boehner has now essentially conceded that shutting down the government would be very bad politically for his party, as the public would fault Congressional Republicans. (And with the rising possibility that the architect of the last government shutdown will become the Republican Nominee, this concern becomes acute.) This suggests that there has been a decisive shift in the political mood of the country. Republicans are on the run, and do not want to run on a Congress that shuts down governments and denies middle class tax cuts. This also shows the resulting shift in power in Congress. Boehner has clearly lost the upper hand in negotiations with President Obama and Democrats in the Senate. He is up against a wall if Congress cannot pass the annual spending and the tax and unemployment extensions.

When there is an inflection point like this, it is time to press the advantage. Democrats need to push hard for an extension and expansion of the payroll tax holiday and against paying for it by Medicare cuts or oil drilling. The President should liberally use the veto threat until he gets an acceptable (not necessarily ideal) bill. And if he could find a way to veto a bill, it is clear that he would side with him instead of a Congress with an approval rating of about 9 (people—not percent).