As Republicans and Democrats grapple over alternative proposals to extend the payroll tax cuts, House Speaker John Boehner said he doesn’t know what impact allowing the middle class tax breaks to expire could have on the U.S. economy, but he said that “there’s no question that the payroll tax relief in fact helps the economy.”
Asked whether the potential failure to pass the payroll cut extension by the end of the year would harm the economy, the speaker said, “I’m not an economist. I don’t know what impact it’s going to have on the economy.”
But moments later, Boehner seemingly backtracked from his previous statement when he was pressed about his lack of enthusiasm to endorse the payroll tax cut for having a positive impact on the economy.
“I don’t think there’s any question that the payroll tax relief in fact helps the economy,” Boehner, R-Ohio, said. “You’re allowing more Americans, frankly every working American, to keep more of their money in their pocket. Frankly, yeah, that’s a good thing. The concern that we’ve had is what does it do to the Social Security trust fund, and that’s why I believe that protecting it is critically important.”
Revenue from the payroll tax flows into a Social Security trust fund to pay out benefits for current and future retirees. Boehner said he is concerned that an unfunded extension could speed up Social Security’s path to bankruptcy.
“It’s important that the payroll tax cut be paid for because that money is used to fund the Social Security trust fund, which is already facing imminent bankruptcy,” Boehner said. “Republicans are ready to work with the president and the Democrats to extend the payroll tax cut and unemployment insurance temporarily but they must be offset with spending cuts elsewhere.”
Boehner said that while the supercommittee failed to strike a bipartisan deal, “there was a lot of important work that was developed that I think will be helpful to the Congress in the coming months and years.” As conversations continue, the speaker would not rule out restarting direct one-on-one negotiations with President Obama.
“We’ll just have to wait and see whether that’s a wise move,” Boehner said. “I’m in the category of one who never wants to give up. The joint committee did in fact move the ball down the field on a number of issues such as fundamental reform of our tax code, both on the business side and the personal side. And what that would look like that could help facilitate another conversation, whether it’s between leaders here, or others.”
“The problem’s still there!” Boehner exclaimed. “We have a $15 trillion national debt. We’re going to add another $1.3 trillion worth of debt to it this year, and this issue has to be addressed and it has to be addressed now.”
Boehner called on President Obama to work with Congress to “find a solution to our long-term debt” and help determine an alternative composition of cuts to weaken the force of the $1.2 trillion in automatic cuts, half of which is set to be slashed from defense spending.
“We’ve got the sequester that kicks in, in about 13 months, but no one really wants to go there. The secretary of defense has made it clear that if those defense cuts were to go into action that it would gut our military, so I really believe that the president of the United States has a responsibility here as well,” Boehner said. “The president is the commander in chief. The president I think understands pretty clearly that these cuts would do serious harm to our ability to defend our country and our allies around the world.”