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Net Net: Promoting innovation and managing change

Corker: Payroll Tax Holiday Battle Is Home Run for the President

The PR battle over the Payroll Tax Holiday between the House and Senate has become another game of political chicken. One Senate member who has publicly expressed his frustration over this is Senator Bob Corker (R-TN) member of the Banking Committee. Corker didn’t hold back on the polarization paralyzing Washington.

LL: There has been talk the Republicans in the past have been successful in communicating their message. But with this payroll tax holiday, House members are losing the PR battle.

While many of my contacts say at the end the day the House bill was a lot stronger than the Senate Bill because it was a year and would give more certainty to businesses’, the short-term bill which was passed is prevailing in the headlines. Why?

Sen. Corker: You point out a very valid point- the House Bill was much stronger than the Senate bill. A payroll tax holiday at this point is poor public policy and where we need to go in the country is to look at overall tax reform which would lower rates and close tax loop holes and reform the system that would generate economic growth.

It’s that longer term predictable things that make the economy grow and to tie in entitlement reform and overall real deficit reduction that is the most potent thing we can do to spark an economic recovery and solve our countries problems. Payroll tax holiday is temporary. It’s just like what George Bush did back in May of 2008, I voted against that. It does not stimulate the economy and in the interim you actually blow resources that would otherwise be used to help get our country in a better financial situation.

LL: Will it happen?

Sen. Corker: We all know it will happen. Republicans and Democrats have supported a payroll tax holiday. So when you get to the point that you know its going to happen and you look at the policies. There is no question the House policy is much stronger. Obviously the payroll tax in the House plan is a year, and it will create some degree of certainty on this issue. But what’s tied to it is this SGR issue (the sustainable growth rate) which deals with paying health care providers across the country and without the extension they’re going to have a 27.4% reduction in what they are getting paid and many of them are going to stop seeing Medicare patients.

So the House Bill fixed that for two years. It also dealt with the issue of unemployment. It had good reforms to work better for our country. What the Senate did was really a nothing, mealy mouth two month extension which really has kept the Senate from making any tough decision which the Senate is prone to do. From the President’s stand point I think he would be much happier with the House Bill than Senate. What the Senate did in my opinion is the worst public policy. The Senate kicked the can down the road.

LL: But the Senate Bill did pass.

Sen. Corker: Yes , I think the number of Republican who voted for this thinking it was something that might support the House Republicans. The policy was not nearly as good but we are where we are. I think we need to come back. It is incredibly arrogant that the Senate decided we passed something take it or leave it.

The way Congress is supposed to work in regular order, the Senate passes a version, the House passes its version, the two go to conference and negotiate and you finish it and you are done with it.

I am all for coming back and doing that. Most economists would agree short-term policies are not good. While the House Bill was good policy I agree with you the messaging on the House Bill has been lost with the American people. I was at the grocery store yesterday and a woman approached me and read some quotes I made in the local paper and it was her understanding that the House had not passed the tax bill. There is a lot of misunderstanding and Republicans are getting killed in the messaging war.

LL: What’s amazing is the Senate has not passed a budget in three years. There is a lot of anger toward politicians. If I didn’t do my job at CNBC I would be fired. Essentially, the politicians we as Americans have elected to office have not done their jobs because they refuse to compromise, pass budgets or solutions to cut spending, entitlement reform and the nation’s deficit. Should there be term limits? Would that push elected officials to do the right thing?

Sen. Corker: I don’t think its career politicians creating this. It’s lousy leadership in the Senate and rank and file members who go along with it. It needs to end, it’s terrible for our country. You really don’t want big, big issues. You need a President who can lay out an agenda that’s middle of road that the Congress and Senate can agree on. We have not had a middle of the road agenda and secondly, rank and file senate members have enabled leaders to make decisions in back rooms, not go through committee process and air drop them.

The Senate is the worst run institution in the country. And it is amazing on this lousy piece of legislation that passed in the Senate, somehow that is winning the day in terms of messaging. The reason the Senate has been so dysfunctional is the Majority Leader’s office has been air dropping things into the Senate from the top.

Not from the committee process. And these bills are not meant to be passed but to create messaging wars which you are seeing now. To me it’s tremendously poor leadership overall within the Senate leadership. I actually objected to something on the floor last Saturday at nine in the morning and it prompted a discussion with Reid and myself.

I asked him if he had any intention of passing a budget anytime this year and agreeing not to spend any money until he passed a budget. I did not vote for a single appropriations bill and it was difficult because there were things I very much support but I decided if we did not take the time to do a budget and make the tough decisions I would not vote for an appropriations bill.

LL: What did Senator Reid say to you when you asked him your question?

Sen. Corker: I appreciate your question but I don’t like to respond on what other people say. But I will tell you I was not satisfied with his answer. It was not satisfactory. I will put it that way.

LL: You mention the “rank and file” members. Do you think these members don’t have the political will to do what’s right?

Sen. Corker: I am not knocking people’s courage but Senators are allowing this air dropping to continue. And it should not continue. What has happened in the House is they knew they had a much better policy and they knew it would be tweaked in it the Senate but I think they are frustrated with the Senate. The Senate doesn’t function. It has become a dysfunctional body. The members allow the way of the day to be these air dropped back door deals to be voted on.

LL: Where does the President fall in this polarization? Should the President be honest with the American people and not choose sides and support the better of the two bills?

Sen. Corker: It works very well for them politically to blame Republicans. It’s unfortunate but I think the average American thinks Republicans control Congress. They don’t realize there is another body of the government. The Senate is controlled by Democrats. I think if you asked the Average American who runs Congress they would say Republicans because of the mantra of the President’s campaign that we have a “do nothing Congress”.

It’s too juicy for them. I know this because I have had conversations with an official and I’ll leave it at that, that if they had their choice policy wise they would rather have something the House did and tweaked a bit but politically they are thrilled with what the Senate has done because it gives the President 60 days to talk about this payroll tax holiday and make it look as if he is a tax cutter. It works so well for them politically they will not intervene. It’s a homerun for them. Which just tells you a lot about Washington unfortunately .


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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."