Senate Dems growing cool to extending payroll tax holiday

The emerging consensus in the Senate Democratic Conference is that the payroll tax holiday should not be extended for another year, even though the economy is slowing.
 
While job creation has fallen below 100,000 new jobs a month for the past three months, Democrats are worried about the impact on Social Security.
 

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It is a tricky political dance for Democratic leaders, who have spent the past two weeks bashing Republicans for blocking their effort to extend George W. Bush-era tax rates for middle-class families earning below $250,000.
 
Sen. Sherrod BrownSherrod Campbell BrownDem senators introduce bill to ban controversial voter purges The Hill's Morning Report — Sponsored by PhRMA — GOP lawmakers race to find an immigration fix Warren to put hold on Trump consumer bureau nominee MORE (D), who faces a tough reelection race in Ohio, said it would be wise to extend the payroll tax holiday another year as well as prolong unemployment insurance.
 
“I think it’s wise to do that, unemployment, all those,” he said.
 
But a growing number of Democrats say it is time to end the stimulus, which cut the payroll tax rate for employees from 6.2 percent to 4.2.
 
“We’re running into this problem. The critics said, ‘You’ll never get rid of it. It’s going to ultimately jeopardize the Social Security trust fund; the general revenue fund can’t continue to subsidize it.’ And we said, ‘No, it’s going to come to an end,’ ” said Senate Democratic Whip Dick DurbinRichard (Dick) Joseph DurbinSenate Gang of Four to meet next week on immigration Live coverage: High drama as hardline immigration bill fails, compromise vote delayed Democrats protest Trump's immigration policy from Senate floor MORE (Ill.).
 
“In terms of whether we need more stimulus in our economy, I think we do. But in terms of using this against the Social Security trust fund, I think for credibility we have to keep our word,” he added.
 
Extending the payroll tax holiday for another year would cost an estimated $120 billion. The loss of revenue to the Social Security trust fund has been replaced with general treasury funds, adding to the federal debt.
 
The Senate Democratic Conference has not yet taken an official position on the issue, but lawmakers are leaning against a third extension, which is opposed by liberal defenders of Social Security. 
 
“I think the consensus has been that the payroll tax cut should not be extended, but I would leave one escape hatch: what’s happening with the economy,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.). “The thing that is hurting us right now is Europe, and the European situation is far from being resolved, and we know this could have continuing adverse impact on our economy.”
 
Conrad said if there is a sharp downturn in the European economy, “I don’t think we’d want any policy responses off the table.”
 
Democratic lawmakers say they do not expect President Obama to call for another extension of the payroll tax.
 
“The president has indicated that he has no intention of extending it and I will support him on that,” said Sen. Sheldon WhitehouseSheldon WhitehouseLive coverage: FBI chief, Justice IG testify on critical report GAO to look into Trump's reduction of carbon social costs Overnight Energy: Pruitt used security detail to run errands | Dems want probe into Pruitt's Chick-fil-A dealings | Yellowstone superintendent says he was forced out MORE (D-R.I.).
 
“The way it was funded created concerns about Social Security that I think are very serious ones,” he added.  
 
A White House official said there are other ways to give middle-class families tax relief.
 
“The payroll tax cut was intended to be a temporary measure to give middle-class families relief during these difficult economic times,” the official said.
 
“Though we haven't proposed extending the payroll tax cut beyond the end of the year, we have looked at many ways to ensure tax relief for the middle class, including pushing Congress to extend the Bush-era rates for 98 percent of families and extending the Earned Income Tax Credit, the Child Care Tax Credit and other tax-relief measures through next year,” the official added.

Congress passed a one-year payroll tax cut in December 2010 as part of a larger deal to extend the Bush-era tax rates and unemployment benefits.
 
Congress extended the payroll tax rate for two months at the end of last year and then for another 10 months in February.
 
Democrats championed the payroll tax break because its benefits went to middle- and working-class families at a time when Republicans refused to approve other stimulus proposals.
 
Economists estimated an average household earning about $50,000 a year would have $20 less to spend each week if the payroll tax break expired.
 
But Democrats are leery about the prospect of what was supposed to be temporary stimulus becoming permanent.
 
“I’m looking at the overall debt and deficit issue right now and I’m thinking at some point in time we have to bring this extension, the expanded payroll tax holiday, to an end,” said Sen. Kay HaganKay Ruthven Hagan2020 Dems compete for top campaign operatives Senate GOP rejects Trump’s call to go big on gun legislation Politics is purple in North Carolina MORE (D-N.C.), who said she has not seen any proposals to extend it.
 
Sen. Joe Lieberman (Conn.), an Independent who caucuses with Democrats, questioned the payroll tax cut’s impact on the economy. 
 
“It’s time to stop these partial, time-limited attempts to stimulate the economy,” he said. “To me, the best way to get the economy going again is to have a bipartisan long-term debt-reduction program because that will give business the confidence to invest money.”
 
Durbin, Conrad, Hagan, Lieberman and Whitehouse voted in February for the Senate-House conference report to extend the payroll tax holiday for 10 months.
 
Sens. Joe ManchinJoseph (Joe) ManchinThe Hill's Morning Report — Sponsored by PhRMA — Trump caves under immense pressure — what now? Election Countdown: Family separation policy may haunt GOP in November | Why Republican candidates are bracing for surprises | House Dems rake in record May haul | 'Dumpster fire' ad goes viral Manchin up 9 points over GOP challenger in W.Va. Senate race MORE (D-W.Va.) and Bernie SandersBernard (Bernie) SandersBernie Sanders: Trump thinks like an authoritarian Democrats protest Trump's immigration policy from Senate floor Trump's America fights back MORE (I-Vt.), who voted against the extension, are still staunchly opposed to the policy.
 
Sen. Charles SchumerCharles (Chuck) Ellis SchumerMontana's environmental lobby teams with governor to kill 600 jobs Dems allow separation of parents, children to continue, just to score political points Democrats' education agenda would jeopardize state-level success MORE (N.Y.), the Senate Democrats’ chief political strategist, said it’s too early to decide the fate of the payroll tax holiday.
 
“I wouldn’t take it off the table right now. You have to see the status of the economy and the overall negotiations. But I wouldn’t put it on the table either. It’s premature to make a judgment,” he said.
 
Legislation to extend the Bush-era tax rates for households earning below $250,000, which Senate Democrats have circulated in recent days, does not include language on the payroll tax holiday.
 
Senate Majority Leader Harry ReidHarry Mason ReidAmendments fuel resentments within Senate GOP Donald Trump is delivering on his promises and voters are noticing Danny Tarkanian wins Nevada GOP congressional primary MORE (D-Nev.) told reporters Tuesday that it would be addressed later in the year.
 
“Right now, we have a very clear picture what we want to do. What we want to do is make sure that people making less than $250,000 a year don't get a tax increase,” he said.
 
“There are other tax issues and we'll look at them,” he added.