Domestic Taxes

Senior House Democrat revives discussion of payroll tax cut extension

A senior House Democrat said Friday that extending the payroll holiday should be “on the table” during post-election talks.

In an interview taped for C-SPAN’s “Newsmakers” program, Rep. Chris Van Hollen (D-Md.) said lawmakers should think twice about letting the tax cut lapse at the end of the year. 

“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.”

Van Hollen’s remarks are significant because they could revive a policy option that had been considered dead and buried. Republicans and Democrats have said the payroll tax holiday should end at the end of this year, emphasizing it was passed as a temporary boost to the ailing economy.

{mosads}He noted that the nonpartisan Congressional Budget Office has reported that the payroll tax cut has had a significant effect on the economy. The Maryland lawmaker stressed on two occasions that he was talking for himself “personally.”

The congressman’s statements are at odds with the wishes of the nation’s largest seniors lobby. On Thursday, AARP urged the White House and Congress not to extend the payroll tax holiday beyond January. AARP is worried that such a move would inflict long-term damage to Social Security, which is funded by the payroll tax.

In September, House Minority Leader Nancy Pelosi (D-Calif.) said the payroll tax cut should be allowed to expire, adding that Congress should focus on revamping the nation’s tax code.

Van Hollen cited the Social Security actuary when he said that it doesn’t take “one penny” out of the entitlement system’s trust fund because those resources are back-filled “dollar-for-dollar” by the general fund.

“[Extending the payroll tax cut] should be part of the conversation,” Van Hollen said while acknowledging he is aware that some want the idea shelved.

The 2-percentage-point cut in the employee portion of the payroll tax was instituted for 2011 and extended in a deal with Congress earlier this year.

Other topics that Van Hollen addressed follow.

Chances of House flipping back to the Democrats: Van Hollen, who headed the Democratic Congressional Campaign Committee in the 2008 and 2010 cycles, predicted his party “will pick up seats” next month. He stopped short of making a bolder prediction, but claimed that Democrats are picking up momentum by highlighting differences with the GOP on Medicare. In order for Democrats to capture control of the House, Van Hollen said President Obama would probably have to win “by a decent margin.”

Nancy Pelosi’s future: There has been speculation that this Congress could be the minority leader’s last. Van Hollen said, “ I don’t know what her plans are,” and praised her leadership of the House Democratic Caucus.

His own future: Van Hollen said he enjoys serving as the top Democrat on the Budget Committee, but didn’t rule out a run for an elected leadership position in the House. “Look, you never know what post-election period will bring with it so you know, obviously people want to look at all their options,” he said. 

Paul Ryan: Van Hollen recently played Ryan in debate preparations with Vice President Biden. He knows Ryan well, having served with him on the Budget Committee. Asked if Ryan has changed since being selected as Mitt Romney’s running mate, Van Hollen said he gets the impression that Ryan is saying things now that he didn’t say before. He noted that Ryan’s speech at the GOP convention was a “heyday” for the fact-checkers. He declined to go further, saying, “I’ll leave it at that.”

Bush tax cuts/fiscal cliff: In 2010, Van Hollen and House Democrats were very upset at the deal Obama struck with the GOP on the estate tax and extending the Bush tax rates for two years. At the time, Van Hollen publicly said the White House cut a deal with the GOP that neither he nor any House Democrat signed off on. Van Hollen doesn’t anticipate a rerun after the election, saying there will be a “different end to this movie.” 

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