Money & Politics with Larry Kudlow

Payroll Tax Deal: Cut the Nanny-State Cord!


On Friday, the president signed the extension to the payroll tax cut. But let’s be sure to understand that this is just a holding pattern. It buys time until after the New Year holiday to bicker and negotiate a full-year extension.

US Capitol Building

We should be ready for a real fight. Tea Party Republicans were held at bay, but they won’t be as accommodating when the real fighting begins.

Nor should they be. 

University of Chicago Booth School of Business Professor Casey Mulligan rightly suggests that we should be rolling back our economic safety net when it comes to unemployment benefits. In his view, with workers contributing 75 percent of the GDP, being disincentivized to work hampers our economic growth.   

Put it simply, if you’re paying people not to work, why would anyone actually work? It’s a rather human behavior. 

We should not be extending our safety net. Doing so turns America into a nanny state, telling people that it is perfectly fine if they don’t look for a job. That is the wrong attitude to take.

What the Tea Party Republicans are doing is to effect change in the political system. Sure, it makes Old Guard Republicans queasy, but this is exactly what our democracy was founded on.

The Representatives in Congress are just that—representatives. If there is gridlock in Congress because of their intransigence, it should signal that there is a larger problem—a systemic political one—and it is one that needs to be corrected.    

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