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Payroll tax cut undermines Social Security, Manchin says

CHARLESTON, W.Va. -- Sen. Joe Manchin, D-W.Va., on Friday explained his vote against both Democratic and Republican versions of legislation that would extend a cut in payroll taxes.

"Americans pay for one thing with our payroll tax. One. Social Security," Manchin said in a Friday conference call with reporters. "We should be talking about how we can come together to fix a fiscal nightmare that will threaten the very programs we care about like Social Security. Instead, we're talking about undermining the very foundations of our longest-standing retirement program."

The current payroll tax of 6.2 percent was temporarily reduced to 4.2 percent for employees. That cut, which increased workers' take-home pay but took $120 billion from Social Security funds, is set to expire at the end of the year.

The Democratic proposal that failed Thursday night would have increased the payroll cut to 3.1 percent, and would have extended the cut to employers. The cost to Social Security would have been replaced by a 3.25 percent tax increase on people with annual incomes of more than $1 million.

The Democratic bill was a central part of jobs legislation President Obama announced in September.

A majority of senators -- 51 out of 100 -- voted for that proposal, but 60 votes were required for passage. Every Senate Republican voted against the bill; Manchin was one of three non-Republicans who also rejected it.

Manchin also voted against a Republican proposal to continue the existing payroll tax cut. That proposal failed on a 78-20 vote; all the votes for it were Republicans.

Manchin said Friday he has asked many West Virginians, "'Do any of you know you are getting a little more money because there was a 2 percent [payroll tax] deduction?' The overwhelming majority did not know that."

But West Virginia's other U.S. senator, Jay Rockefeller, said he supported the Democratic proposal "for a simple reason: It puts money into the paychecks of ordinary, working families, will assist small businesses, and can spark job creation across the country."

Rockefeller spokesman Vincent Morris said West Virginians will notice on Jan. 1 if the payroll tax cuts aren't extended and their take-home pay goes down.

"It will be a real bite," Morris said. "It would be different if the economy was in great shape and people were hiring. But we are still at a point where unemployment is high all over the country. If this will put money in people's paychecks, then it is worth the trouble."

Despite his vote against the proposal with the 3.25 tax increase for the wealthiest Americans, Manchin said our current economic "system is weighted toward the wealthiest, wealthiest, wealthiest in America."

Manchin believes "corporations are keeping too much of their revenues overseas" and that the government should "shut off" the "advantages of these offshore protections."

"It is time to face up to the problems we have in this country," he added. "I have urged the president and the [congressional] leadership to take up this cause."

Manchin also believes the current payroll tax cuts have done nothing to help the economy.

"I have not found one employer in West Virginia who told me that, with that discount, they would hired anybody. Not one person."

Rockefeller disagrees. "My overriding goal, as this year comes to a close, has been helping struggling West Virginians and finding ways to create jobs and new opportunities. The payroll tax cut is a sensible way to do that and I am proud to vote for it," he said. "Economists estimate this provision would create more than 1 million new jobs -- and potentially save many more."

Reach Paul J. Nyden at pjnyden@wvgazette.com or 304-348-5164.


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