By Russell Berman - 09/11/11 06:20 PM EDT
President Obama’s push to extend a payroll tax cut has united a rare combination of conservative Republicans and liberal Democrats in opposition.
When Obama first pushed to include the proposal in a tax package in December, House liberals said the tax holiday would threaten the Social Security trust fund, which is maintained through the payroll levy. Now that he wants to extend and deepen the tax cut, a number of House Republicans are making the same argument.
With bipartisan support in December, Congress approved a one-year reduction in the employee share of the payroll tax, to 4.2 percent from 6.2 percent. Obama proposed in his speech to Congress that the tax be lowered to 3.1 percent for both employers and employees through 2012.
While the moves add to the deficit, the administration has said the trust fund would not be affected because the money would be shifted from the general fund and because the change is temporary.
Liberal Democrats were not convinced, and they began campaigning against extending the tax break when it was first broached earlier this year.
“We remain gravely concerned that yet another, unacceptable cut to Social Security’s revenue stream appears to be on the table,” a group of 62 House Democrats wrote in a July letter to the president. “As alternative measures would have the same net effect on deficits and the economy, there is simply no need to negotiate cuts to Social Security taxes.”
Obama has made a big push for continuing the payroll tax cut, and he needled Republicans during his speech to Congress about the pledge many of them made to oppose tax increases.
“We can’t allow that tax cut to expire. It would hit middle-class families with a tax increase at the worst possible time,” the president said Thursday. “And some of you may have heard -- I said to folks yesterday, especially my good Republican friends, I said, you guys have made pledges never to raise taxes on everybody ever again -- you can’t make an exception when the tax break is going to middle-class people.”
The president’s campaign has put GOP critics in the awkward position of opposing a tax cut. Sessions said to allow the payroll tax holiday to expire would not be a tax increase but would be “correcting a mistake.”
Republican leaders, including Sessions, agreed to the cut last year, and House Majority Leader Eric Cantor (R-Va.) signaled this week he was open to an extension, though he said it was not his preferred policy move. Sens. Scott Brown (R-Mass.) and Marco Rubio (R-Fla.) are among other Republicans who support the extension.
Some House Republicans who were not in office last year, however, appear cool to the idea. Rep. James Lankford (R-Okla.) questioned why Obama would propose cutting the payroll tax at the same time as he was acknowledging that entitlement programs needed to be put on more solid footing.
“He mentioned that we’ve got to have major reform, but then to cut some of the funding was an interesting surprise to me,” Lankford said. “If there’s any one area in cutting taxes that’s dangerous for us, it’s cutting Medicare and Social Security payments.”
Rep. Austin Scott (R-Ga.), criticized the proposal along similar lines, saying he would want to see a report from the chief actuary on what impact the tax cut would have on the long-term solvency of Social Security and Medicare.