Congressional debate continues this week on plans to extend the Social Security tax cut, unemployment benefits and other expensive provisions that are about to expire. Last week the Senate again voted down earlier Democratic and Republican proposals that would have reduced the Social Security payroll tax next year, with a number of GOP lawmakers rejecting their leadership’s plan.
On Friday House Republicans released a proposal to extend this year’s 4.2 percent rate on workers’ taxable income, which is two percentage points below the normal rate for Social Security taxes.
The House GOP legislation included extended unemployment benefits and postponement of a steep reduction in Medicare payments to health care providers, something Congress has repeatedly done in the past. The legislation also included provisions opposed by many Democrats, including a measure to hasten a large pipeline project.
Democrats have sought a 3.1 percent Social Security payroll tax rate next year and disagree with Republicans on how to pay for the proposed tax cuts and other year-end measures. The proposed tax cuts -- like this year’s cut -- would not affect Social Security benefits. But the loss of this payroll tax money increases Social Security’s reliance on general government revenues.
Members of Congress are also considering an adjustment in the alternative minimum tax to again protect middle-class taxpayers from what was originally intended as a measure to ensure reasonable taxes on high incomes.
The Concord Coalition has long argued that the government can provide effective short-term support for the economy through measures such as extended jobless benefits while still putting long-term fiscal reforms in place to hold down government debt in the future.External links:Summary of House GOP Legislation by Speaker John Boehner's OfficeHouse Democratic Leader Nancy Pelosi’s Comments Dec. 9 Dec. 9 Statement on GOP Legislation by Senate Republican Leader Mitch McConnellMonday Floor Remarks by Senate Democratic Leader Harry ReidPresident Obama’s Weekly Address (Video and Transcript)