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.
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a renewal of jobless benefits for people who have been out of work for more than six months, as well as a fix for an outdated government formula intended to prevent doctors from having to take huge cuts in their Medicare payments.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.
More from MSN Money:
VIDEO ON MSN MONEY
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.