The art of the possible: still cramped and narrow after all these years

There’s been a lot of back and forth in the comments and elsewhere about the payroll tax cut and whether or not the Democrats should have ever signed on to something that gives the enemies of Social Security another cudgel with which to bash the program. I certainly agree that it’s as inevitable as the sun coming up tomorrow that the depletion of the trust fund will be used at some point to justify benefits cuts. But I’m also fairly sympathetic to the fact that allowing those tax cuts to expire without an adequate replacement would be contractionary at a very bad time. It’s hard to see how they could have done anything else in this environment. Which is the problem in a nutshell.

Further, the way the payroll tax cut is being marketed by too many of its Democratic proponents is maddening. Essentially, they sound like Republicans, and tout the simple virtue of the extension as being families having to pay less in taxes, period. How many of us have heard the statistic about a family earning $50,000 in wages will save $1,000 from the payroll tax cut? I’d guess pretty much everybody who has dipped into this debate for even a second.

On the other hand, how many know the estimates of how many jobs will be created or preserved because of the increased economic activity it spurs? Very few of us who aren’t economists, I’d imagine. Conservative estimates put it between 400,000 to 700,000 jobs. But it’s the jobs that make this tax cut worth doing – unless progressives are willing to willing to accede to the Republican framing that all the economy and American families really need is “tax relief” – a phrase that actually appears in the Senate bill extending the payroll tax cut for two extra months.

This inability to connect economic policy to the larger problem of joblessness is a real problem with the debate over the payroll tax cut. This disconnect explains why the unemployment insurance extension bundled with the payroll tax cut have attracted so much less attention. After all, if all that matters is the first tranche of money, the payroll tax cut will affect many more households than the UI extension. But all serious economists agree that the extension of unemployment insurance is a far more efficient fiscal support – providing about 50 to 100 percent more jobs per dollar added to the deficit.

What makes unemployment insurance so much more efficient? It is laser-targeted at families in genuine distress, meaning that the recipients will spend every marginal dollar that comes in the door. This also makes the extension better targeted at alleviating actual economic misery. I, for example, get a pretty big benefit from the payroll tax cut and that’s nice, but I’m (knock wood) doing pretty well. People like me really shouldn’t be highest on the list of policymakers’ concerns today. Sadly, this last point might not make for good politics.

I’m not sure if this is a lack of imagination, laziness, design a combination of the three. But no liberal should ever even utter the words “tax relief.” And by failing to properly spell out the reasons for stimulus over the past two years — jobs — the Democrats have actively helped the GOP tie their hands over the course of this recession. (I won’t even go into the political malpractice of spending an entire year flogging deficit reduction and austerity…)

This isn’t just petty partisan politics. I don’t care what anyone says, it matters how you frame problems and solutions. The parameters of what’s possible are made through these understandings and the agenda is largely fashioned around them. Indeed, the public’s understanding of how the economy and their government works is the essence of democracy — it is a failure of leadership when both parties succumb to a political framework and agenda that works against the national interest.