While Senate Minority Leader Mitch McConnell said lawmakers shouldnt allow anyones taxes to go up this year, Senate Finance Chairman Max Baucus said later that the payroll tax cut is not high on the priority list.
A giant middle-class tax hike looms at the end of the year, and both parties and the White House — for now — seem content to ignore it.
As the two parties close in on the climax of a decade-long clash over Bush-era tax cuts, neither party has proposed preventing a looming $120 billion yearly payroll tax hike.
Last year, President Barack Obama had Republicans over a barrel, accusing them of wanting to raise taxes on the middle class unless they extended his payroll tax cut — worth 2 percent of a worker’s salary.
The GOP caved on this year’s extension, but there has been nary a peep since from the White House, presumptive Republican nominee Mitt Romney or Congressional leaders in either party about extending it again. And Senators today expressed doubt that it would be extended.
The payroll tax cut actually costs the Treasury more than the Bush tax cuts for those making more than $250,000 a year, which have become the subject of the titanic struggle on Capitol Hill. On its own, its expiration will result in one of the largest tax increases in history.
But the payroll tax cut was sold as a temporary measure. It has no lobbying arm and no super PAC. The maximum tax cut per person — just more than $2,000 per worker — isn’t the stuff that gets people to make campaign contributions or hire an army on K Street to woo lawmakers to keep it. And the Bush-era tax cuts are taking up all of the oxygen.
White House Press Secretary Jay Carney said it was premature to discuss the issue when asked about it recently. And lawmakers in both parties on Capitol Hill have been nervous about the payroll tax cut because it could over time erode the funding for Social Security. Although so far the tax cut has been structured to come out of the general fund, in an era of trillion-dollar deficits, there’s no guarantee that Social Security will get all of the trillions in IOUs that the general fund already owes it.
That’s an argument the GOP made last year against extending the payroll tax cut the first time before it relented just before Christmas. But the political case Obama and the Democrats prosecuted against Republicans then was more potent. How could they fight tooth and nail against a dollar of tax hikes for millionaires while forcing a tax hike on 160 million families?
But this year, Democrats and the White House are pitting tax cuts for the wealthy against spending programs they say would have to be cut deeply instead — from roads to education to health care and research.
Lois Lerner, director of exempt organizations for the IRS, arrives for a House Oversight and Government Reform Committee hearing on the investigation of the IRS' targeting of political groups. Lerner invoked her Fifth Amendment right to not testify and caused a protest from some committee members when she offered an opening statement and engaged in dialogue with members before invoking the right.
Roll Call has launched a new feature, Hill Navigator, to advise congressional staffers and would-be staffers on how to manage workplace issues on Capitol Hill. Please send us your questions anything from office etiquette, to handling awkward moments, to what happens when the work life gets too personal. Submissions will be treated anonymously.