White House tips its hand on payroll tax cut

J. Scott Applewhite/AP
The president's top economic adviser on Monday said Obama still believes the expiring payroll tax cut should be a part of broader fiscal talks, suggesting that an issue that some believed was settled months ago could see new life.

"The payroll tax cut has helped middle-class families, has helped support the economy and support consumption," Alan Krueger, the chairman of the White House Council of Economic Advisors, said during Monday's White House press briefing. "There are many tax provisions that are expiring at the end of the year and the president has said that the payroll tax cut, among others, should be on the table."

As recently as September, the cut seemed destined to expire. In recent months, however, it has enjoyed renewed support among Democrats.

Obama's former top economic adviser Larry Summers and the top-ranking Democrat on the House Budget Committee Rep. Chris Van Hollen, D-Md., both said in October that an extension of the cut, which affects 160 million taxpayers, should not be ruled out. More recently, Sen. Kent Conrad, D-N.D., told Reuters he backed extending it, while Senate Finance Committee Chairman Max Baucus, D-Mont., said it should be on the table.

Still, the administration and some Democrats have resisted explicitly backing it, simply saying it should be a part of ongoing end-of-year fiscal negotiations. Such apparent ambivalence may stem from the fact that its impact doesn't seem to have registered with taxpayers and powerful organizations, such as AARP, who oppose it on the grounds that it saps funds from Social Security, which is funded through the payroll tax.
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