Not Surprisingly, Payroll Tax Cut Extension Talks Not Going Anywhere
Yep, more gridlock.
When the House and Senate finally agreed to pass a two month extension of the Payroll Tax Cut in December rather than work toward a year-long extension the plan was that the Senate and House would spend the ensuing eight weeks meeting to reach a deal to extend the cut all the way through the end of 2012. Not surprisingly, things aren’t exactly working out the way they were intended:
House Ways and Means Committee Chairman Dave Camp’s private assessment of the payroll tax debate is pretty bleak.
Late Monday afternoon in Speaker John Boehner’s office, the Michigan Republican told House GOP leadership that the negotiations to extend the tax holiday seem like a replay of the disastrous deficit supercommittee, according to several sources present.
Democrats are dragging out negotiations because they think it helps them politically, and Senate Majority Leader Harry Reid (D-Nev.) won’t let Sen. Max Baucus (D-Mont.) cut a deal, Camp told GOP leaders, according to the sources. No one besides Baucus, Camp said, is willing to make the decisions necessary to move forward — two assessments not shared by Democrats.
The tax holiday expires at the end of this month.
It should be no surprise to anyone that in the heat of an important negotiation with a massive impact on the American public, Senate Democrats and House Republicans are at a logjam with negotiations seemingly going nowhere.
It’s unclear if the two sides even know what each other is thinking.
As recently as last week, a top Boehner aide warned that Republicans should be prepared for Democrats to push another two-month extension — and Republicans should come up with a plan to combat that. But Senate Democrats flatly deny they’re even thinking about such a plan and said they are solely focused on a yearlong extension of the 2 percent payroll tax cut.
After the meeting with Camp, Boehner and Majority Leader Eric Cantor (R-Va.) sent out a statement saying the Senate should focus on House-passed spending cuts because progress has not been made.
It’s all just business as usual in the dysfunctional Capitol, where neither chamber and neither party appear able to have the minimum level of communication over strategy as a tax increase looms for 160 million Americans.
Not surprisingly, the disagreements are the same ones that forced Congress to punt on this issue back in December – how to pay for for the extension of the tax cut, unemployment benefits, and the Medicare “Doc Fix.” Among other things, Republicans are pushing a federal pay freeze, which would say roughly $26 billion over the remaining course of the year. Other proposals include raising premiums on wealthy Medicare recipients, and seeking reimbursement of overpayments made by the Federal Government under the new health care law. One the Democratic side, Senator Bob Casey pushed the idea of a 1% surcharge on incomes over $1,000,000, but that idea was quickly shot down by the Conference Committee. Additionally, such a surcharge has already been shot down in the Senate when tied to other bills when it failed to make it through the first cloture vote. So, here we stand at an impasse.
If the last round of fighting over this is any indication, not to mention all the other deadline showdowns we have seen in Congress over the past two years or so, we’ll end up seeing a deal at the last minute that makes nobody happy. But make no mistake, there will be a deal. This is an election year, and there’s simply no way either party is going to risk being blamed for the failure to extend the tax cut or unemployment insurance, and the same goes for the “Doc Fix.” The only question is how they’re going to do it. Personally, my guess is that we’ll end up seeing something that’s a combination of the pay freeze and the Medicare premium increases, but don’t expect anything resembling that tax surcharge because that’s not happening.