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QUICK TAKE: Lawmakers Confident of Ending Payroll Tax Impasse QUICK TAKE: Lawmakers Confident of Ending Payroll Tax Impasse

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Congress / CONGRESS

QUICK TAKE: Lawmakers Confident of Ending Payroll Tax Impasse

photo of James Kitfield
December 12, 2011

With Congress poised to leave a chunk of coal in the Christmas stockings of 160 million U.S. taxpayers, there are signs that the impasse over extending the current payroll-tax rate one year may be broken. Before a deal can be reached, however, both sides still feel the need to posture on behalf of their favored solution for extending a tax break that put an average of $1,000 into the pocket of each American family last year.

“I believe we should extend the payroll tax holiday for another year, and we believe we have a balanced package that can pass the House and Senate on a bipartisan basis,” said Senate Minority Leader Mitch McConnell, R-Kentucky, speaking on Fox News Sunday.

He was referring to a bill filed by House Republicans Friday that would extend the current payroll-tax rate for one year, continue unemployment benefits, and prevent a scheduled cut in Medical physician reimbursements. The cost of the House bill would be offset by spending cuts unpopular with many Democrats, however, and includes “sweeteners” for conservatives such as a green light for the controversial Keystone XL pipeline opposed by many environmental groups.

 

When asked whether a deal can be reached despite President Obama’s promise to veto a bill that includes the Keystone provisions, McConnell was unequivocal. “Yes, but it also has to have something that creates jobs.”

On NBC’s Meet the Press, assistant Senate majority leader Dick Durbin, D-Illinois, insisted that Democrats were sticking with their proposal to pay for the tax holiday with a surcharge on millionaires that is anathema to Republicans.

“The payroll tax extension is the highest priority for Democrats, because we’re talking about a payroll tax cut of $1,000 a year for 160 million people,” he said. “[President Obama] is right that this is a make-or-break moment for the middle class, yet Republicans have consistently refused to increase taxes on the wealthiest Americans even if that’s what it takes to make sure working families get a payroll tax cut.”

Despite the familiar partisan brinksmanship that has defined the current Congress, lawmakers’ confidence that a deal will ultimately be struck suggests a realization that a whopping tax hike for voters just in time for the holidays would likely bring down a pox on both parties.

“At the end of the day, the payroll tax cut will be extended and we’ll find a way to pay for it,” said Sen. Lindsey Graham, R-S.C., appearing on Meet the Press. “The idea of taxing one group to pay for another’s tax cut won’t sell, but neither probably will the Keystone pipeline.”

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