A temporary tax cut, approved to help stimulate a lack-luster economy, is poised to be extended. But could the cut in the tax that funds the Social Security Trust Fund become permanent?
Sen. Ben Nelson, a Democrat, supports extending the two-percent payroll tax cut as a measure to give working Americans a break and the economy a boost.
Could it become permanent?
“Well, not by law and not by this legislation,” Nelson responds. “But there’s always the issue that is out there that when you have a tax cut, how do you not extend it into the future?”
Nelson says worries about the impact of the tax cut extension on the Social Security Trust Fund have been overblown. He points out that the legislation being debated this year includes budget cuts and tax increases to pay for the $105 billion cut.
Sen. Mike Johanns, a Republican, says Congress has a choice about whether the payroll tax cut becomes permanent.
“I guess it will if we allow it to,” Johanns says.
Johanns opposes extending the payroll tax cut. He is among a significant minority arguing that the tax cut extension does indeed threaten to undermine the Social Security Trust Fund. Nevertheless, Johanns sees the measure passing.
“I think so,” Johanns says, pausing before adding. “I think it’s one of those things that it’s very, very hard to tell people we shouldn’t be doing this.”
Approximately 160 Americans would be affected by the payroll tax cut, one million of whom live in Nebraska. The cut would put about a thousand dollars in the pocket of workers spread out throughout next year. Extension of the tax cut is the only piece of President Obama’s $450 billion jobs plan likely to pass Congress. The proposal cuts the payroll tax from the normal rate of 6.2% to 4.2% for 2012.
The Senate Saturday approved a two-month extension of the tax cut 89-10, postponing a decison on whether to extend it for the full year. The bill also includes the Keystone XL pipeline provision, forcing President Obama to make a decison on whether to grant TransCanada’s presidential permit for the $7 billion, 1,700 mile pipeline within 60 days. House Republican leaders have expressed misgivings about the bill and might force it into conference with the Senate.