Senate Democratic leaders and President Obama discussed offering a new proposal to extend the employee payroll tax rate and unemployment benefits that would not include a surtax on incomes of more than a million dollars a year as a way to pay for the bill, a Democratic aide said.
"They are exploring other offsets and could make a new offer with no millionaire’s surtax at all," the aide said. Alternatives to cover the bill's cost would likely come from nonentitlement spending known as "other mandatory" spending. That could include savings from Fannie Mae and Freddie Mac. Democrats have already proposed farm subsidy cuts, spectrum sales and other provisions discussed by the super committee.
Democrats have been expected to drop the surtax, which Republicans almost unanimously oppose, when they move toward an actual payroll compromise.