Thursday, February 23, 2012

Compromise Ahead of Elections? What's the catch?

The United States House of Representatives and Senate passed a year-long extension of the payroll tax cut last Friday, Feb. 17, marking another legislative victory for President Obama ahead of the 2012 elections. Want to know the best part? The bill was passed through with bipartisan support and a hefty helping of compromise. Crazy, huh?

The payroll tax cut, which was temporarily extended last fall, was packaged with an extension of federal unemployment benefits. The $143 billion economic package will reach over 160 million workers. A big reason the bill garnered bipartisan support in both houses was because of two conservative-leaning provisions: one reducing the time that individuals can stay on unemployment and another helping to support doctors who treat patients on Medicare. Both Democrats and Republicans hope that it will help sustain the country’s economic recovery.

But if Obama supported the bill, why did it pass? It turns out, voting yes (or in some cases, voting no) to a bill before an election can give candidates great PR ammunition.

Obama is likely to tout this bill as his latest effort to boost the economy, a subject that will dominate the upcoming presidential election. He will use this bill, along with the American Recovery and Investment Act and the recent drop in the unemployment rate, to take credit for moving the economy forward post-recession. If this is properly communicated to target audiences (think American’s unemployed, underemployed and the middle class) it could result in a big boost in public opinion for Obama.

Democrats are likely to piggyback on Obama’s economic messages, a strategy that worked well for them in 2008. They can add this to the list of legislation that they voted for to help the economic recovery. This makes them look like strong advocates for the middle class, a powerful position in the wake of the Occupy movement.

Finally, Republicans who voted for the bill might choose to promote their bipartisanship in the promotion of economic growth. This could work well if Obama has a high approval rating in their states. Republicans who voted against the bill can position themselves as strong advocates of the conservative, top-down approach to macroeconomic policy. However, the corresponding messaging might appear insensitive to unemployed or underemployed individuals.

Whichever way you want to look at it, the payroll tax extension was a strategic vote. Only time will tell if it pays off, and for whom.

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