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Payroll tax cut extension stalls

The contentious issue remains how it will be funded. Four negotiating sessions have yielded plenty of political rhetoric, but no progress.

By MSN Money Partner Feb 8, 2012 1:49PM

This post is by Andrew Taylor of The Associated Press.


The prospects for an extension of President Barack Obama's payroll tax cut, once considered a slam dunk on Capitol Hill, now seem far less certain as talks in Congress have deadlocked over finding ways to pay for it.


In a contentious negotiating session Tuesday, Democrats came out against House GOP proposals to partially pay for the two percentage point payroll tax holiday through freezing federal workers' pay and requiring more affluent seniors to pay higher Medicare premiums.


Also at stake: a renewal of jobless benefits for people who have been out of work for more than six months, as well as a fix for an outdated government formula intended to prevent doctors from having to take huge cuts in their Medicare payments.


After four public sessions, the House-Senate talks have failed to yield a single significant breakthrough, leading party leaders in both the GOP-dominated House and Democratic-led Senate to lob charges that their rivals are slow-walking the negotiations.


"We have significant concerns about whether Senate Democrats are really willing to step up and work with House Republicans on the payroll tax cut bill," House Speaker John Boehner, R-Ohio, said. "Senate Democrats have never come to the table with a plan to offset this new spending that they're all for." (Post continues below video.)

For his part, Senate Majority Leader Harry Reid, D-Nev., has threatened to bring up a whole new measure if the House-Senate negotiations remain stalled.


Michigan Rep. Dave Camp, the top GOP negotiator, has turned the focus to the most contentious issue: finding ways to foot the bill for the $150 billion to $160 billion cost of the measure.


But Camp, a top Boehner lieutenant, has been slow to invite Democrats to discuss their ideas to pay for the legislation, insisting -- at least until Tuesday -- on obeying arcane rules that limit the scope of the debate to the GOP ideas that have passed the House on a near-party-line vote last year. That has led to meandering discussions on topics like blocking Environmental Protection Agency rules on emissions from industrial boilers and allowing states to impose drug tests on people receiving jobless benefits.


After Tuesday's talks went nowhere, Camp finally invited Democrats to submit proposals not related to those contained in the House GOP measure and said that negotiators might be forced to scale it back.


Tuesday's almost three-hour discussion, like three previous ones, favored speechifying over real negotiations.


Lawmakers lobbed charges back and forth over whether it was fair for three million federal civilian workers to have their pay frozen for a third consecutive year to help pay for the tax cut and whether seniors with income exceeding $80,000 a year should pay more for their Medicare coverage.


"It seems to be the flavor of the day to go after federal workers," said Rep. Chris Van Hollen, D-Md.


Leading Democratic negotiator Sen. Max Baucus of Montana added: "We should not be penalizing (Medicare) beneficiaries while we're increasing doctor fees."


But Sen. Jon Kyl, R-Ariz., a veteran of the failed budget "supercommittee" and deficit talks last year involving Vice President Joe Biden, said the ideas had been all but agreed to in negotiations last year.


"We're hearing 'no' for the sake of hearing 'no,'" said Rep. Kevin Brady, R-Texas.


Negotiators also split over whether people who receive health insurance subsidies under Obama's new health care law should have to repay a greater portion of overpayments they may receive. It's a complicated topic, but Democrats have supported the idea in previous legislation.


Taken together, the three provisions discussed Tuesday would raise $70 billion over a decade to finance the jobless benefits, payroll tax cut and Medicare payments to doctors.


The proposals amply demonstrated the tradeoffs involved in cutting spending elsewhere in the budget to defray the cost of cutting taxes. Sen. Ben Cardin, D-Md., pointed out that the proposed pay freeze for federal workers would end up costing them far more than they would get from the two percentage point payroll tax cut, which would deliver just $20 a week to a typical worker earning a $50,000 salary.


Similarly, a proposal to raise $31 billion over a decade by requiring wealthier seniors to pay higher Medicare premiums would eventually require 25% of beneficiaries to pay higher "means-tested" premiums instead of just 5% now.


Democrats came out in opposition to each idea, saying it would be unfair to use spending cuts affecting the middle class to fund the payroll tax measure. But Republicans shot back that a so-called millionaires' surcharge pushed by Democrats went nowhere in the Senate and that the cuts have to come from somewhere.


As for the partisan pot-shots from top leaders Reid and Boehner, Camp said: "I don't think the comments from either side of leadership, from either body, are particularly helpful."


Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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Feb 8, 2012 3:24PM
Feb 8, 2012 4:32PM
Leave it to congress to accomplish nothing again.  Vote ALL incumnents out!  At least we can try and send a message, even if Washington isn't intelligent enough to figure it out.
Feb 8, 2012 4:18PM
When 10% of the taxpayers pay 70% of total taxes, the tax code is re-distributing to the so called less fortunate.  Federal pay and benefits have been overly generous for years so let them pay some of it back.
Feb 8, 2012 3:10PM
PAYROLL TAX CUTS FOR THE MIDDLE CLASS...Bohner says H..  NO YOU CAN"T.... TAX REFORM is the biggest issue of our time but  we have to talk about CONTRACEPTION! Our current tax policies have allowed 400 families to have more money than 50% of the rest of the nation combined and we continue to re-distribute the money to the top through the TAX code. These tax policies are a THREAT TO LIBERTY. RON PAUL, WHERE ARE YOU WHEN WE NEED YOU!!! You can see the threat in action by the contributions made  to the SUP PACS that support Romney and Karl Rove. Money will buy the TOPICS OF DISCUSSION and cause MANY people to vote against their own interest. So let's talk contraception, gays, WMD in Iran, abortion,  the NRA, Planed Parenthood, Acorn, Birth certificates, etc etc etc....IN 2012. Stick it to the middle class..The Republican motto's not a lie if they believe it!!!  Obama 2012!!!!
Feb 9, 2012 5:44PM
Over 3000 comments on the gun discussion today and only 6 on a subject that is probably one of the most important... the extension of the payroll tax for the middle class. I'd bet that most of the 3,000 would benefit from the extension but the propaganda of the NRA and any discussion of gun ownership keeps them focus on non issues. ....YESTERDAY IT WAS CONTRACEPTION...The 1% win again!!! WHEN ARE WE GOING TO TALK ABOUT TAX POLICIES!!!
Feb 9, 2012 12:43PM
The GOP would like nothing better than to see the slight uptick in the economy go back down.  That is the only way one of their unimpressive candidates will be able to Obama.  By suspending unemployment benefits and taking away the middle class tax break (and not giving federal employees a raise) the economy will stagnate once again - albiet temporarily -but perhaps long enough.  Remember, their number one goal is to get rid of Obama - it is not to help the economy or improve life in America, just to get rid of him at all cost.  One need only look at their current priorities to see this - anti-birth control ideas, taking away voter rights all across the nation, crushing unions - these are in no way associated with the making of any jobs or improving the economy in any way.
Feb 8, 2012 6:41PM
Fair tax??

I bet there is no tax on financial transactions in your so called fair tax? Things like the !% buy other than groceries, IE purchases of stocks, bonds, mutual funds, etc.  So how fair is it ?

How about 0% income tax and a 75 % inheritance tax to fund the government. Now we all pay the same, right!  You can't take it with you!!!!

Feb 12, 2012 8:13AM
The gop makes a big issues out of everything the white house said and do. At last we have another leader that has tried to do something instead of the gop nothing. When  did the gop live up to anything they said. the american people gave them 6 years of total control to take care of balancing the budget and put people back into good paying job. All they did was run us into 14T in the hole over thirty years lost us the best paying job. And all they can do is blame dem. They can not run on there record they have nothing, all they can do is talk,talk,and talk about changing everything dem. do. clinton put us on the right track and gop derail it and started spending money we didn't have again. If bush tax cut made so many job obama won't be in office today. We have to kept electing dem to cleanup the gop mess-ups.
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