Republican lawmakers are struggling to shake off the view that they’re only out to help “the haves” over “the have-nots.” Today on Fox and Friends, Sen. John McCain (R-AZ) insisted that he along with other Republicans are fighting the tide of gratuitous benefits Congress has unnecessarily bestowed upon America’s millionaires. “We obviously don’t think that’s fair,” he said.
But when considering the Democrats’ compromise to renew the soon-to-expire payroll tax cut for middle-class Americans, McCain opted for another priority. “We need to come to an agreement” on a repatriation holiday for multinational corporations, he said. Instead of ensuring that working families get to keep $1,000 in their pockets, McCain would rather allow corporations to bring back overseas profits at a dramatically lower tax rate, asking, “Why don’t we do that?”:
MCCAIN: But most of all, we need to come to an agreement on things like repatriation of the $1.5 trillion dollars that’s sitting overseas. We could give them a lower tax rate — a much lower tax rate to bring that money home and create jobs. Why don’t we do that? All we’re going to do is continue the fight that we are in and it’s very unfortunate and we Republicans have to stand back and give an overall plan to get our economy going again and give our businesses some confidence.
McCain’s preference for helping corporations over middle-class families is not just bad priorities, it’s bad economics. The Congressional Research Service found that repatriation holidays in the past offered “little evidence” of new investments. Indeed, the companies that took advantage of the holiday ended up cutting tens of thousands of jobs. In 2004, corporations used 92 percent of their repatriated profits to “enrich their executives and buy back their own shares, not to invest in job creation.”
Sacrificing the payroll tax cut for such a policy only compounds the negative consequences. Macroeconomic Advisers point out that a lapse in the payroll tax cut for 113 million households “would reduce GDP growth by 0.5 percent and cost the economy 400,000 jobs.” Barclays PLC said that, without the extension, it would “drop its growth forecast by 1.5% for the first quarter of next year.”