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A Familiar, Sinking Feeling Develops on Payroll Tax Cut

Members of the payroll conference committee fought to a draw in their fourth public meeting Tuesday, making no progress toward finding a way to pay for a payroll tax holiday and dimming the prospects that a deal can be struck by the month’s end.

A Senate Democratic offer on unemployment insurance issues is in the works, and Members said they want to pick up the pace of the talks. But — barring a major breakthrough in the next few days, Members acknowledged — the latest high-stakes negotiation in a year of botched cross-party talks will go the way of the Joint Committee on Deficit Reduction: abject failure.

“I was very discouraged after today’s session,” conferee Rep. Henry Waxman (D-Calif.) said. “We may be facing what Congress has faced every step of the way — in the super committee, on the debt ceiling.”

All the while, Congressional leaders are sniping at one another from afar and calling into question the very willingness of the other side to come to an agreement on a full-year extension of a payroll tax cut and unemployment insurance benefits and lapsing Medicare doctor payments.

“We have significant concerns about whether Senate Democrats are really willing to step up and work with House Republicans on the payroll tax cut bill,” Speaker John Boehner (R-Ohio) told reporters. “Senate Democrats have never come to the table with a plan to offset this new spending that they’re all for. And I’m concerned about the actions that they’ve taken.”

Meanwhile, Senate Democratic leaders continued to put pressure on the conference committee, with Majority Leader Harry Reid (Nev.) telling reporters Tuesday that the panel needs to come up with a product by early next week.

“We need an agreement next Monday or Tuesday. Otherwise, we’ll have to go to the floor with something,” said Reid, who last week said he had begun preparing a “backup” plan.

The back-and-forth was enough to drive House Ways and Means Chairman Dave Camp, the conference committee’s co-chairman, to call for both sides to back off.

“Frankly, I guess my only point would be: Let’s let the conferees work,” the Michigan Republican said. “I don’t think the comments from either side of leadership from either body are particularly helpful.”

Camp’s counterpart, Senate Finance Chairman Max Baucus (D-Mont.), will present a second offer on unemployment insurance this week, this time dealing with the major points of contention.

The House-approved bill cuts the weeks of eligibility to 59 from 99 and allows states to require drug testing and education thresholds.

But, as has been the case all along, the two sides are far apart on how to pay for the policies. Tuesday’s meeting was the first to even broach the topic, but three proposals floated by the House GOP to offset $70 billion were unceremoniously shot down by Democrats in an often testy meeting.

Republicans broached a pay freeze for federal workers and a reduction to Medicare subsidies for seniors with a retirement income of $80,000 or more. They also proposed an increase to the maximum amount of money that must be paid back if someone receives a greater subsidy than he or she is entitled to under health exchanges created by President Barack Obama’s health care law.

Democrats accused Republicans of cherry-picking policies from Obama’s deficit reduction proposals instead of taking into consideration the full proposal, which also included their favored surtax on millionaires.

“If we’re serious, we’re going to have to compromise,” Sen. Benjamin Cardin (D-Md.) told Camp in one of the more-heated exchanges of the meeting. “But to go through this list that you are isolating, I’m not so sure is helpful to reaching an agreement on a set of offsets that I think we should get to.”

Republicans, on the other hand, hold that Democrats are harping on the millionaire tax when the proposal has already been shot down several times in the Senate.

Further complicating things is the fact that Senate Democrats have their annual retreat today, disrupting the workweek, and both chambers are scheduled to recess the week of Feb. 20.

There have been discussions about another short-term extension, and though both parties have expressed an outward reluctance to make such a move, the difference between Republicans and Democrats might yet again be too great to resolve.

“I guess the time-honored response in Washington is to split the difference, and the other one is, ‘Didn’t we just do this on a short-term basis?’ So I would just say that I hope it doesn’t get to that,” Senate Majority Whip Dick Durbin (Ill.) said.

Earlier Tuesday, in a demonstration of the stickiness of the situation, Sen. Dean Heller (R-Nev.) sent a letter to Camp asking him to consider keeping current levels of jobless benefits in states such as Nevada, where unemployment has run rampant. Heller is up for re-election this November.

“As the Conference Committee sets priorities, I urge you to preserve unemployment benefits at their current levels in states like Nevada that continue experiencing high unemployment,” Heller wrote.

Senate Republicans have not formally put forth a position on the change to the unemployment system, but sources close to the committee suggest their general position aligns with their House counterparts.

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