There is enough bipartisan support in Congress to extend a payroll tax holiday first introduced by President Obama along with an extension of unemployment benefits. If nothing is done, both will expire early next year. So, what’s the problem? The debate over how to pay for it has devolved back into the same squabble Republicans and Democrats have been having since the spring.
Senate Democrats on Monday suggested a $180 billion bill that would be offset by a combination of GOP-backed spending cuts and a surtax on those earning more than $1 million a year. Democrats billed this as a compromise because in the past Republicans have not bothered to offset tax cuts at all. “If Republicans block this proposal, raising taxes on American families by a thousand dollars next month will have an immediate negative impact on our economy, it will halt very singularly our still-fragile recovery in its tracks and drag us back into a recession,” said Senate Majority Leader Harry Reid. “We all know Congress can’t afford to play chicken with the economy. That’s why Democrats are committed to passing this tax cut. Republicans need to be prepared to meet us partway.”
President Barack Obama took to the White House briefing room on Monday afternoon to reprimand what he called GOP hypocrisy. “I know many Republicans have sworn an oath never to raise taxes as long as they live,” he said. “How could it be the only time there’s a catch is when it comes to raising taxes for middle class families?”
The sticking point is the surcharge on millionaires — a tax increase that Republicans oppose. As an alternative, they put forward a $200 billion measure that would be paid for by cuts to Medicare benefits. “Our number one priority is the same as the America peoples’ – jobs. There is widespread support for extending the current payroll tax holiday, and everyone – Republicans, Democrats and the President himself – says it should be done in a way that does not increase our deficit,” said Michael Steel, a spokesman for House Speaker John Boehner. “If the President wants to make progress, he should insist that Senate Democrats remove the job-killing small business tax hike from their partisan proposal.”
Sound familiar? Yes, this is the same exact debate we had in the debt ceiling and the supercommittee. Democrats want to raise taxes on the wealthy and Republicans want to cut Medicare benefits. And they’ve had trouble resolving this difference in the past, even when the livelihoods of millions of Americans hung in the balance. Pennsylvania Democrat Bob Casey has put forward a potential compromise, which would not extend the payroll tax break for employers, shrink the millionaire surtax and include GOP means testing without cutting benefits. But not before all the familiar partisan shots were taken. After all, it’s now a Washington tradition.