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Daunting To-Do List Before Leaving D.C.

With time running out before the end of the year, Congress will be hard-pressed to finish everything on its to-do list.

Senate Democrats and House Republicans are expected to clash over what to do first. The list is long: extending the payroll tax cut, extending unemployment insurance benefits for the long-term jobless, passing a raft of expiring tax provisions known as extenders, patching the alternative minimum tax, acting to prevent a cut in payments to doctors who treat Medicare patients and passing a spending package made up of the remaining nine annual appropriations bills.

House GOP leaders are still developing their endgame, and they are set to consult with their rank and file this week.

Senate Democrats expect the House to start with legislation to prevent the cut in payments to doctors. Democrats see the “doc fix” as key to a deal on other priorities, particularly the payroll tax cut and unemployment insurance.

“While both sides agree on the need to address the Medicare doctors’ issue, Republicans should not plan on taking care of the doc fix and leaving unemployment insurance and the payroll tax to wither,” a Senate Democratic leadership aide said.

Starting at the beginning of 2012, Medicare payments to doctors are scheduled for a nearly 30 percent cut and those collecting extended unemployment insurance will stop receiving those benefits.

Senate Democrats plan to hold a vote as soon as this week on legislation to reduce the payroll tax rate for employees to 3.1 percent for 2012 and to reduce it for employers. The $265 billion cost would be offset by a tax on those making more than $1 million a year. Currently, workers pay 4.2 percent, but that expires at the beginning of the year, reverting to the
6.2 percent rate normally paid.

Senate Minority Leader Mitch McConnell (Ky.) said Tuesday that Republicans would offer a proposal with an alternative offset. He declined to reveal how the offset would be paid for, but he said a majority of his Conference favors extending the payroll tax cut.

House Democrats on Tuesday indicated that extending unemployment benefits is a major priority and that they plan to put pressure on their GOP counterparts.

Democrats have scheduled a news conference Wednesday with Labor Secretary Hilda Solis and several unemployed workers.

House Minority Whip Steny Hoyer said Tuesday that “we ought not get out of here before doing that work.” 

The Maryland Democrat, Assistant Minority Leader James Clyburn (S.C.), House Ways and Means ranking member Sander Levin (Mich.) and Sens. Tom Harkin (Iowa), Jack Reed (R.I.) and Sheldon Whitehouse (R.I.) also will attend the Solis press conference.

Hoyer said he does not favor offsetting a UI extension with spending cuts elsewhere, which could cause friction with the GOP-led House. But he said his Caucus is interested in paying for a payroll tax extension and the doc fix.

“We will cooperate with Republicans on paying for them,” Hoyer said, although he declined to say where Democrats and Republicans might find common ground.

A GOP leadership aide said savings identified by the Simpson-Bowles Commission, the Rivlin-Domenici Commission or the president’s budget could be a starting point.

A Senate Democratic aide said Democrats suspect Republicans will also look for offsets in the work done by the Joint Committee on Deficit Reduction that failed to come to agreement before its deadline last week.

There were a handful of provisions upon which both sides were close to agreeing. They total about $300 billion and include savings from changes to pension benefits for federal employees, a reduction in agriculture subsidies and spectrum sales.

Another possibility is counting $700 billion in savings from ramping down the wars in Iraq and Afghanistan.

The extenders tax package and patching the alternative minimum tax are typically passed unpaid for but are not the primary focus at the moment and could be done retroactively next year because they would affect tax year 2012, sources said.

That leaves appropriations, which will likely be handled in a catchall omnibus package that includes the nine remaining annual spending bills and will total about $900 billion. Three spending bills were passed in a minibus package before the Thanksgiving recess.

Congress has until Dec. 16 to act before temporary spending expires. One Senate Democratic aide said that an omnibus is the best option compared to letting the government shut down or passing a year-long continuing resolution that doesn’t take into account any Democratic or Republican priorities.

Senate Democratic leaders wanted to pass another minibus package of three spending bills including the Energy and water development bill, the State and foreign operations measure and the
financial services and general government bill. But Senate Majority Leader Harry Reid gave up on that after  GOP objections earlier this month to attaching the other two bills to the Energy and water measure.

The Nevada Democrat put the Energy and water bill aside but said he hopes to return to it if an agreement can be worked out on amendments with Republicans.

“It’s very hard to call at this point,” a House Democratic aide said. “As of earlier today, there was still the possibility that Energy and water would come to the floor separately in the Senate, further delaying omnibus consideration. It’s really hard to say one way or the other on CR versus omnibus at this early stage.”

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