WASHINGTON – While almost all Democrats agree with President Obama that creating jobs and reducing unemployment should be a priority, some of the most liberal members of the Democratic coalition, including DFL Rep. Keith Ellison, are concerned about the President’s proposal to extend and expand the payroll tax cut which funds Social Security.
Until this year, employees and employers each paid a 6.2 percent tax on wages that went toward Social Security. Under a temporary tax deal struck last December, the employee side was cut for one year to 4.2 percent to boost the economy by slightly fattening workers’ paychecks. President Obama’s new plan would further cut the tax to 3.1 percent on both employers and employees through 2012, at a cost of $240 billion.
At a Capitol Hill press conference this morning, Ellison emphasized his support for much of the President’s agenda but said he’s concerned about the proposal.
“I am worried that it could set up a long term problem for Social Security,” said Ellison, “As a strictly temporary measure, I could live with it for a little while.”
While the President’s plan calls for the tax rate to return to 6.1 percent in 2013, there’s a long history of temporary tax measures becoming quasi-permanent because members of Congress are reluctant to be accused by opponents of raising taxes.
With Social Security’s stream of dedicated funding temporarily reduced, a larger share of the program’s benefits must come from direct government revenues.
Ellison and his allies in the Congressional Progressive Caucus want to expand on the President’s jobs plan by having the government to hire two million workers to improve schools, parks and neighborhoods.
The payroll tax cut also lacks support from some Minnesota Republicans in Congress. Last month, Reps. John Kline and Erik Paulsen told MPR News they were skeptical about the effectiveness of the payroll tax cut.