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Payroll Tax Cut Conferees Avoiding Sticky Issues

Members aiming to hash out a deal on the payroll tax cut conference committee still find themselves on shaky ground after their second meeting, with broad agreement on where to go but little agreement on how to get there.

Still, an opening offer from Senate Finance Chairman Max Baucus (D-Mont.) looks to secure at least some progress on low-hanging fruit at today’s follow-up meeting.

The 20 conferees agreed Wednesday on general goals: extend the payroll tax holiday and unemployment benefits for the balance of the year and temporarily prevent cuts to doctors’ Medicare reimbursement while working on a long-term solution.

When it comes to paying for or changing the programs, however, there was almost no accord, and the panel’s co-chairman, House Ways and Means Chairman Dave Camp, encouraged Members to ignore talk of how to pay for things for now.

“What we’re really trying to do is make sure we agree on policies today,” the Michigan Republican said. “We want to begin at least to find areas where there are agreements.”

In that endeavor, the group might have a small breakthrough, as Baucus, the Democratic co-chairman, is poised to offer his counterparts an olive branch on some minor unemployment insurance reforms.

“I would hope that we can reach as much agreement on those provisions as possible,” Baucus told the panel. “To make headway, we’ll prepare a good-faith offer” to submit to the House and discuss at today’s meeting.

Baucus said the offer would not include issues such as mandatory drug testing or the total length of time benefits should be paid but would be limited to “second-tier issues.”

He indicated the proposal could include a requirement that states recover overpaid jobless benefits and a mandate that those who receive benefits seek re-employment, two items in the House bill.

Nevertheless, the details of what the Democratic conferees plan to offer were closely guarded Wednesday — so close that many top Senate Democratic leadership staffers were not briefed on the offering by press time.

The least controversial pieces of unemployment insurance reform likely will look like what President Barack Obama proposed in his jobs bill last September. The administration proposed giving greater flexibility to states, something Republicans support in principle, by creating incentives for employers and laid-off workers.

Pieces of the president’s plan that could be offered are: work-sharing measures that would provide unemployment insurance to employees whose bosses reduce hours and pay instead of impose layoffs; a “Bridge to Work” program that would encourage states to offer temporary work or on-the-job training; enabling states to create wage insurance programs to re-employ older workers; and creating a state-based program to encourage entrepreneurship among laid-off workers.

These issues, however, even if they are accepted by GOP conferees, only scratch the surface of the problems facing the committee. In the past, UI funds were designated as emergency spending and exempted from Congressional pay-as-you-go rules. However, conservatives in the House want the benefits offset, making the calculus difficult for Democrats looking for a way to bridge the 40-week differential in UI coverage. In the House-approved bill, the maximum weeks of benefits were cut to 59 from 99.

Democrats again pushed for a surtax on millionaires to pay for the program extensions, but House Ways and Means ranking member Sander Levin hinted after the meeting that his party might have to back off.

“I guess when there’s a wall, we see the wall, and the Republicans have been emphatic that they don’t want to increase the taxes on the very, very wealthy,” the Michigan Democrat said.

Sources familiar with negotiations between Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) indicated that when the two men were trying to negotiate a full-year deal in December, there had been talks of settling on a window of coverage in the range of 70 weeks.

Even if an agreement is reached on the time frame, House Republicans proposed several other changes, including requirements that jobless beneficiaries show progress toward getting a GED or high school diploma.

“There’s a saying that you can’t teach an old dog new tricks, but that’s not true for the head of a household who wants to get back to work and earn a living for his family,” Senate Minority Whip Jon Kyl (R-Ariz.) said Wednesday. “He’s willing to learn how to use a BlackBerry or a computer or something like that in order to be able to be a more useful employee.”

Democrats rebuffed the proposal, noting most Americans receiving benefits are more than 40 years old. “It’s just fundamentally, I think, flawed,” Sen. Benjamin Cardin (D-Md.) said. “A GED is not going to make a difference for them getting their jobs back.”

Rep. Xavier Becerra (D-Calif.), on the other hand, worried that time spent discussing UI reforms at all would jeopardize the effort entirely, and the program “should not be put at risk because we can’t figure out a way to get this done by Feb. 29.”

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