The Tea Party Tax Increase?

Tea Party Republicans Take the Economy Hostage (Again)

The House of Representatives will vote later today on a bipartisan compromise to extend the payroll tax cut and unemployment benefits and prevent a massive cut in Medicare reimbursement rates. Unfortunately, the Tea Party Republicans in control of the House are now threatening to vote down this essential bill.

Here’s the rundown.


THE DEAL: A two-month extension of both the payroll tax cut and unemployment benefits and a two-month reprieve from cuts to Medicare reimbursement rates.

Republicans also insisted a provision to force the president to make a decision on the Keystone XL tar sands pipeline within 60 says — which the Obama administration says almost certainly means the pipeline will be rejected.

This deal, which the president supports, overwhelmingly passed the Senate on Saturday by a vote of 89-10.

WHY TWO MONTHS? Republicans repeatedly refused to accept a small surtax on millionaires to pay for a 12-month package and instead insisted on paying for a 12-month version via a “rob Peter to pay Paul” scheme that took money from the middle class in order to give money back to the middle class. The latter would be counterproductive and negate the overall economic value of the deal.

The president and Democrats want to avoid a tax increase on 160 MILLION Americans and any interruption of unemployment benefits, so they agreed to a short-term deal in order to protect the middle class and give all sides time to reach an agreement for the remaining 10 months of 2012.

TEA PARTY GOP SAYS NO: After privately urging Senate Republicans to make a deal and send it back to House for final passage — which is exactly what happened — Speaker John Boehner (R-OH) ran into a buzzsaw of opposition from Tea Party extremists in  his own caucus.  As a result, Boehner publicly walked away from the deal yesterday and said the House will vote down the bipartisan compromise later today.

These are the same Tea Party extremists who nearly shut down the government this spring and then almost forced an unprecedented default on our obligations over the summer.

WHAT’S NEXT: Having believed there was a deal, the Senate adjourned for the year and Senate Majority Leader Harry Reid (D-NV) has said there will be no more negotiations until the House passes the bipartisan compromise to make sure taxes don’t go up on the middle class and that jobless Americans will still receive their unemployment benefits after January 1, 2012.

The House is set to vote later this evening.


  • Taxes will go up on 160 MILLION working Americans
  • 1.8 MILLION jobless Americans will lose their unemployment benefits in January alone
  • Elderly Americans may have difficulty seeing a doctor, as doctors may refuse to treat Medicare patients as a result of the dramatically reduced reimbursement rates


ThinkProgress’ Pat Garofalo has the numbers:

– According to Macroeconomic Advisers, allowing the payroll tax cut to lapse “would reduce GDP growth by 0.5 percent and cost the economy 400,000 jobs.”

– Barclay’s estimated that letting the cut expire would knock 1.5 percent off of first quarter growth next year.


– Ameriprise Financial Services estimated that extending the cut “is likely to add between 750,000 to 1 million jobs.”

– Susan Wachter, a finance professor at the University of Pennsylvania’s Wharton School, calculated that the payroll tax cut “would add 1 percentage point to economic growth and create 1 million jobs next year.”

– Regional Economic Models Inc. estimated that the cut would pump “$120 billion into U.S. households in 2012.”

IN THREE SENTENCES: It seems the only policies Tea Party Republicans are really interested in are those that benefit millionaires and billionaires, not those for the middle class or the jobless. Conservatives believe that America’s economy was built by the 1 Percent, so it is not surprising that they are willing to harm the other 99 Percent to preserve policies that protect perks for the wealthy few. We need solutions that help make the economy work for everyone, not more hostage-taking from Tea Party Republicans trying to impose their extreme agenda on America.

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Advocacy Team