AP News

Pelosi: Don't extend payroll tax cut next year


WASHINGTON (AP) — The Social Security payroll tax cut should be allowed to expire at the end of this year and lawmakers should turn instead to overhauling the entire federal tax code, House Minority Leader Nancy Pelosi said Friday.

The 2 percentage point reduction in the 6.2 percent payroll tax, first enacted last year, had been a major element of President Barack Obama's proposals to rejuvenate the economy. The effort to renew it for 2012 prompted a prolonged battle with Republicans last winter, especially in the House, that resulted in an eventual GOP surrender and a major victory for the president.

Pelosi, D-Calif., also declined to tell reporters whether she would continue as her party's leader next year should they fail to gain control of the House in November's elections. The one-time House speaker said that would be up to her fellow Democrats and her family as well "after all this time."

Pelosi, 72, has been in the House since 1987 and been the chamber's Democratic leader since 2003. She became the first female House speaker in history in 2007.

There has been little talk among Democrats about reviving the payroll tax cut yet again for next year, and Obama did not propose renewing it in his 2013 budget. Even so, few Democrats until now have said openly that the measure should be allowed to lapse.

The question of renewing the payroll tax cut has been overshadowed by January's scheduled expiration of across-the-board income tax cuts dating from President George W. Bush, which will terminate unless lawmakers act. In addition, automatic slashes in defense and domestic programs are slated to take effect in January without congressional action, reductions triggered by the failure of deficit reduction efforts last year.

"Let's deal with the issues," Pelosi said. "Let's put the tax code on the table, simplify, make more fair and close a lot of the special interest loopholes that are in there."

The payroll tax cut has affected 160 million workers and saved about $1,000 annually for a worker earning $50,000 a year.


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