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Paths Emerge on Payroll Tax
By NAFTALI BENDAVID and JANET HOOK
The Senate late Thursday was poised to reject competing Democratic and Republican proposals for extending the current payroll-tax break, but that would clear the way for the two parties to negotiate a broader deal on that and other crucial items by year end.
Congress is under pressure to complete tasks like extending unemployment benefits and adjusting payments for doctors under the Medicare system, both of which face a year-end deadline. In addition, it must act by Dec. 16 to continue funding the government. The Democratic and Republican bills let each side score rhetorical points, freeing them to some degree to make compromises.
Since last week's failure of the deficit-cutting supercommittee, the mood in the Capitol has been somewhat deflated. Lawmakers are eager to take care of year-end business, head home for the holidays and perhaps take another shot at deficit reduction next year.
Republicans have largely come around to Democrats' view that with a weak economy, the payroll-tax cut and unemployment benefits should be extended, while Democrats are moving toward the Republican position that those programs should be paid for, rather than tacking the cost on to the federal deficit. That could pave the way for a relatively civil end to a highly contentious year that careened from one spending fight to another.
"I do believe there's enough common ground between where the White House and Democrats are and where Republicans are for us to move this legislation and to do so quickly," said House Speaker John Boehner (R., Ohio).
Leaders of both parties are moving quickly to make sure that happens. House Republicans are set to meet Friday to discuss year-end items, while lawmakers are considering options for merging items into a compromise package.
The payroll-tax fight captures the state of play. Workers this year have seen their payroll taxes, which fund Social Security, cut to 4.2% of their salary from 6.2%. Democrats want to cut that further to 3.1% and extend the tax break to employers, paying for it with a 3.25% surtax on income over $1 million.
Republicans counter with a plan to extend the current tax break and fund it by freezing the pay of federal workers and cutting the government workforce by 10% through attrition.
Democrats say that would eliminate 200,000 middle-class jobs. "Do the Republicans really believe…that the way to revive the economy is to lay off more FBI agents or to fire more border-patrol officers?" asked Senate Majority Leader Harry Reid (D., Nev.). Republicans responded that shrinking the government was a far better way to fund the payroll-tax cut than the Democrats' call for a permanent tax increase on the wealthy.
"This is the kind of balanced plan Americans are looking for," said Senate Minority Leader Mitch McConnell (R., Ky.). "It's focused on helping middle-class Americans…and it does so without hamstringing the economy, as Democrats would, with a permanent tax on job creators."
Despite such rhetoric on both sides, lawmakers see a path to compromise. One option is to pay for the payroll-tax cut with some of the spending cuts that the supercommittee explored before it broke up, such as the sale of broadband spectrum and an increase in security fees on airline tickets.
That money could also help pay for other year-end items. During the recession, employment benefits have been extended to 99 weeks, and many lawmakers want to renew that program for another year. Congress also regularly adjusts the Medicare-payment formula so physicians don't see an abrupt decline in their fees, a step that must be taken by Dec. 31.
"There are a bunch of different knobs on the control panel," said a Senate Democratic aide. "The good news is that usually this horse-trading doesn't start three weeks in advance. Now it's already starting."
—Laura Meckler contributed to this article.
Write to Naftali Bendavid at naftali.bendavid@wsj.com |
发表于 2011-11-30 13:50
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