[Congressional Record (Bound Edition), Volume 157 (2011), Part 15]
[House]
[Pages 20255-20256]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         FIXING THE PAYROLL TAX

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
California (Mr. McClintock) for 5 minutes.
  Mr. McCLINTOCK. Madam Speaker, one of the items of unfinished 
business remaining to this Congress is extending the payroll tax cut of 
last year that funds Social Security. It is an inframarginal tax cut, 
meaning that it doesn't change economic incentives and therefore it 
doesn't produce lasting economic growth. But it does provide great 
relief to working families, allowing them to keep more of their 
earnings at a time of declining incomes, shriveling assets, and rising 
prices, and it should be extended. But it must be extended responsibly 
to avoid doing further damage either to the economy or to the Social 
Security system that this tax supports.
  That means we have to make up the lost revenue. Now the Democrats 
have said, well, no problem, just tax the rich. In fact, they say that 
a lot. The problem is that the tax increases they propose are marginal 
tax increases, precisely the kind of tax increase that does enormous 
damage to the overall economy. Remember, more than half of net small 
business income would be subject to their tax increase--at precisely 
the moment when we're depending upon those small businesses to create 
two-thirds of the new jobs that our people desperately need.
  Now the measure passed out of the House this week also does far more 
harm than good. Unfortunately, the House added $167 billion to this 
year's already crushing deficit, mostly to pay

[[Page 20256]]

for the payroll tax cut, purporting to repay 1 year's tax relief over 
the next 10 years. How does it do that? Well, in part, it tacks on 
additional fees to mortgages backed by Fannie Mae and Freddie Mac. This 
shifts the burden to home buyers, who will end up paying far more in 
new taxes that are now hidden in their mortgage payments than they will 
ever get back from the tax cut. True, under the House version, the 
average family will save over $1,000 in payroll taxes, but if that 
family takes out a $150,000 mortgage backed by Fannie or Freddie, 
they'll end up paying an extra $3,000 as a result of this bill--$1,000 
of tax cuts for $3,000 of extra mortgage payments.
  Put more bluntly, the House version kicks the housing market when 
it's already down, making it that much more expensive for home buyers 
to re-enter that market and adding to the pressures that have 
chronically depressed our home values. Worse, the House version would 
turn Fannie and Freddie into tax collectors for the general fund. If 
the House bill is enacted, we will have constructed a cash machine for 
government with an adjustable knob. And given the insatiable appetite 
of this government, the odds are far greater that that knob will be 
turned up and not down in coming years.
  Ironically, one of the reasons to continue the payroll tax cut is 
because of shrinking family assets--mainly the value of their homes. 
The House version adds to the downward pressure on their home values 
while telling them we're doing them a favor. Some favor.
  Fortunately, there is a way to extend the payroll tax cut, protect 
the Social Security system, and avoid doing further harm to the 
economy, and that's the measure offered by Mr. Landry of Louisiana, 
H.R. 3551. That bill was given short shrift in the House last week, and 
that's a shame.
  Mr. Landry's bill would give every American the choice to receive the 
year of tax relief in exchange for delaying their retirement by a 
month. According to the Social Security chief actuary, this would pay 
for itself. It would give every family in America the choice of 
deciding for itself whether the benefits of the tax cut are worth the 
cost of working a month longer. It would provide tax relief for those 
families that need it without doing harm to the Social Security system 
that the tax supports and without shifting the burden to pay for it to 
home buyers, as the House version does, or to job creators, as the 
Senate version would have done.
  It's not too late to fix this problem the right way. And I would 
strongly urge the House to take Mr. Landry's bill more seriously in the 
closing days of this session.

                          ____________________