By ALAN FRAM, Associated Press
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, and resulted in an eventual GOP surrender and a major victory for the president.
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.
Pelosi, D-Calif., 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." Democrats need to gain 25 seats in the 435-member chamber to become the majority, which most analysts and many politicians consider unlikely.
Pelosi, 72, has been in the House since 1987 and has been the chamber's Democratic leader since 2003. She became the first female House speaker in history in 2007.
Pelosi also said she believes that "there isn't any way on the face of the Earth" that Republican presidential candidate Mitt Romney will be elected. Most national polls show Obama with a slight edge.
"He had no call to service, no aspirations for the American people. He just wants to be president," she said.
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," said Pelosi, adding that the payroll tax reduction was always meant to be temporary. "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."
Lawmakers are expected to start addressing January's expiration of tax cuts and automatic spending reductions — called the fiscal cliff — when they return to Washington after the November election for a lame-duck session. The effort seems likely to drag well into next year.
Extending the payroll tax reduction costs about $95 billion a year. Lawmakers will be searching for every dollar they can find to offset the combined half-trillion dollar cost of renewing the Bush tax cuts and averting the spending reductions.
The payroll tax cut has affected 160 million workers and saved about $1,000 annually for a worker earning $50,000 a year.
Earlier this month, White House press secretary Jay Carney said the administration would decide whether the reduction needed to be extended at the end of this year "when we're looking at a whole range of issues."
Associated Press writer Julie Pace contributed this report.
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