This is an excerpt from Executive Insight Briefing, produced every Thursday by the National Journal’s Daily Briefings Team.
Democrats fought for the extension of the payroll tax cut the last time around. But Democrats now sound like they’re throwing in the towel this time.
“It never should have been enacted in the first place,” Senator Tom Harkin (D-IA) told Politico recently. “It was a terrible mistake. But it was done and it should not be extended. It’s got to end this year. Period. No more.” Harkin has, among others, expressed concern that the cut diverts money from the Social Security trust fund.
House Minority Whip Steny Hoyer told National Journal last week, “It was clearly meant to be a temporary tax cut, so from that standpoint, it’s temporary.” That also sounds like a non-endorsement for extension. Finally, White House press secretary Jay Carney said, “The payroll-tax cut originally – and through its extension – was a temporary measure.”
In that context, “temporary” sounds a lot like “done with.” And with all the other dire matters facing a post-election Congress, the payroll tax cut – which expires Dec. 31 – was fairly low down on the lawmakers’ lists. But that doesn’t mean its expiration won’t be felt by average Americans. According to estimates, expiration will yank $120 billion from taxpayers’ wallets and shave off 0.3 percent from gross domestic product.
The last fight over the cut in 2011 was largely seen as a political win by Democrats and a bungle by Republicans.
If allowed to expire, the rate will return to 6.2 percent, up from its current 4.2 percent.
Read the complete September 27, 2012, edition of Executive Insight Briefing.