Keep payroll tax cut extension on the table, Maryland Democrat says

By Niraj Chokshi

October 22, 2012 - Government Executive

An extension of the expiring payroll-tax cut should be on the table during negotiations after the election, the top-ranking Democrat on the House Budget Committee said on Sunday. The comments suggest a shift from what some believed to be a settled issue as recently as t hree weeks ago.

"I don't think anyone thinks we should permanently extend the payroll tax cut, but given the situation we're in I don't think that should be taken off the table," Rep. Chris Van Hollen, D-Md., said on C-Span's Newsmakers, noting that he was "speaking personally."

More than 150 million people have benefited from the two percentage point cut to the payroll tax first enacted in 2010 and extended through 2012 as a form of economic relief for the middle class. The tax is set to revert back to 6.2 percent on Jan. 1.

Last month, however, House Democratic Leader Nancy Pelosi and others said that should be allowed to happen.

Now that consensus seems to be falling apart. Former White House economic adviser Larry Summers said earlier this month that "this is not the right moment to repeal the payroll-tax cut," advocating for an extension as a short-term economic stimulus. And a White House spokeswoman last week said "we will continue to evaluate all of the options available to us" after the election.

On Friday, AARP, the huge lobbying organization for seniors, pushed back as the payroll tax funds Social Security.

"As we continue to recover from difficult economic conditions, we must remember the critical importance of Social Security for both current and future generations of Americans," AARP's Barry Rand wrote. "We must ensure that efforts to promote economic health do not undermine the single most important source of retirement and disability income for millions of workers and their families."

Van Hollen addressed those concerns: "This doesn't take one penny out of the Social Security Trust Fund because those funds are backfilled dollar-for-dollar out of the general fund."

By Niraj Chokshi

October 22, 2012

http://www.govexec.com/oversight/2012/10/keep-payroll-tax-cut-extension-table-maryland-democrat-says/58926/