CQ TODAY ONLINE NEWS
Dec. 6, 2011 – 11:04 p.m.
Stalemate Persists on Payroll Tax
By Ben Weyl, CQ Staff
Lawmakers remain at an impasse over how to extend a popular Social Security payroll tax cut with less than a month to go before it expires.
The latest proposal from Senate Democrats, billed as a compromise, has not won support from the chamber’s Republicans, who are undecided on how to respond. House Republicans have yet to settle on a plan as leaders work to persuade skeptical rank-and-file members to support an extension.
On Tuesday, a pair of senators tried to break the logjam with a payroll tax cut plan that includes provisions intended to appeal to lawmakers from both parties. But it is unclear whether that legislation has much chance of advancing.
Although the bipartisan bill — sponsored by Maine Republican
After the Senate rejected two competing partisan proposals last week, Majority Leader
The Democrats’ bill would be financed largely by a 1.9 percent surtax on individual income over $1 million that would be applied first in 2013 and expire after 10 years. Additional offsetting revenue would be generated by raising the fees paid to Fannie Mae and Freddie Mac, the two government-run mortgage financing companies.
GOP lawmakers repeatedly have rejected measures that included tax increases on high-income Americans, arguing that they would harm small companies whose owners pay taxes as individuals. Still, Senate Republicans remained undecided Tuesday about how to respond to the Democrats’ new payroll tax cut proposal. And McConnell said he would not reveal a new GOP payroll tax cut plan until later this week.
“I expect there will be an alternative, but I can’t tell you right now exactly what it is,” said Cornyn, who was one of 26 Republicans who voted against the bill last week.
A senior Democratic aide said Reid was expected to file for cloture on a motion to proceed to the new payroll tax measure Wednesday, setting up a vote no later than Dec. 9 that would have a 60-vote threshold.
House GOP Seeking Alternatives
Party leaders will address the House Republican Conference on Wednesday morning, hoping to shore up support for an extension of the payroll tax cut and to settle details of their plan. A House GOP leadership aide said floor action would occur next week.
The House measure is expected to extend for one year the current payroll tax cut plus benefits for the long-term unemployed, and prevent a cut in Medicare payments to doctors for two years. Senate Democrats also support renewing those programs, which are set to expire at year’s end, but have not addressed them in payroll tax cut bills.
Stalemate Persists on Payroll Tax
At a Dec. 2 GOP conference meeting, House leaders encountered strong conservative opposition to the payroll tax cut extension. Many GOP lawmakers said they were worried about not funneling owed taxes to the Social Security trust funds and objected to the idea that current spending will be offset over 10 years. Others complained about being asked to extend tax and benefit provisions that were meant to be temporary.
Some Republicans have discussed phasing out the payroll tax cut by extending it for two years and making it smaller in the second year. That approach might ease concerns of some lawmakers that a one-year extension would leave Congress in the same difficult position next year, with workers once again facing a sizable tax increase when the law expires.
Phasing out the tax cut instead of ending it abruptly would also cost the government more money, limiting its support.
“There have been some talks about that,” said Rep.
To appeal to skeptical lawmakers, House GOP leaders are likely to incorporate pieces of the party’s energy agenda in the package, including a delay in a new pollution standard for industrial boilers and a removal of barriers to construction on the Keystone XL pipeline.
These steps may not be enough to bring along many conservatives, however, and Democrats would have to supply votes for passage, as they have for several spending bills this year.
“I would hope we can have a package that can get 218 Republicans, but if we can’t then we’ll need a package with genuine bipartisan support,” said Rep.
Similar to anticipated House plans, the Collins-McCaskill bill would provide relief for manufacturers on the “maximum achievable control technology” standards for industrial boilers. But that may not be a sufficient enough concession to win Republican votes, because the measure also relies on a millionaire surtax.
“I am not in favor of raising taxes on working people,” McConnell said when asked about the bill Tuesday. He said he would support extending the payroll tax cut “in conjunction with job-creating proposals” to come from the House.
At a Tuesday speech, Obama repeated his call to extend the tax cut, enacted as part of last December’s tax deal (PL 111-312). It temporarily reduced the employee-paid share of the Social Security tax to 4.2 percent from 6.2 percent.
“Most immediately, we need to extend a payroll tax cut that’s set to expire at the end of this month,” Obama said in Osawatomie, Kan. “If we don’t do that, 160 million Americans will see their taxes go up by an average of $1,000, and it would badly weaken our recovery.”
Sam Goldfarb and Alan K. Ota contributed to this story.