Skip to content

Parties Near Deal on Payroll Tax Cut Extension

Updated: 8:35 p.m.

Top negotiators today have a tentative deal to extend the payroll tax cut, unemployment benefits and a fix to Medicare doctors’ payments, and Congressional leaders began to speak in terms of “when” and not “if” an agreement would be reached.

It was a surprising turn for a Congress that has been marked by intransigence and last-minute betrayals — even between colleagues of the same party — when it comes to reaching legislative compromises.

Weary from protracted floor fights and a campaign by President Barack Obama against Capitol Hill dysfunction, House Republicans on Monday withdrew their demands to fully pay for the $100 billion payroll tax holiday. That gave new oxygen to House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Finance Chairman Max Baucus (D-Mont.) to craft the details of a deal that required them only to offset the cost of the “doc fix” and jobless benefits.

“We still have some outstanding items, but … we’re very close to completing them,” Camp said this evening.

House Majority Leader Eric Cantor said the package has some victories for the GOP, but ultimately compromising is “the only way Democrats are going to allow this to happen.”

“Chairman Camp was able to get some reforms in UI and to manage some pay-fors on the issue of unemployment insurance,” the Virginia Republican said.

Earlier in the day, Senate Majority Leader Harry Reid (D-Nev.) hinted at what was coming.

“It’s pretty clear, at least to me, that the payroll tax is going to pass,” Reid told reporters.

“I’m hopeful and cautiously optimistic that the House will work with us so that the conference can be completed to include that,” Reid added. “So I’m not going to get into hypotheticals to what happens, but right now, we’re awaiting to see what we get from the House, and then we’ll decide what we have to do in the foreseeable future after that.”

Confidence around an agreement, however, is not the same as a deal being locked in, even if the principals were close. The same history that made today’s events surprising could also make them tenuous. House Republican leaders were set to brief their Members late this evening, and Democrats and Republicans nervously waited to see whether rank-and-file GOP Members would go along with the tentative agreement.

One Republican aide familiar with the talks sought to emphasize the conservative highlights, saying, “The underlying policies are flawed and a far cry from the pro-growth policies America needs. It is worth noting that: The plan provides temporary tax relief for American families and takes off the table a false political attack the president and Congressional Democrats wanted to use all year long — that somehow Republicans were standing in the way of a middle-class tax cut. There are no job-killing tax hikes to pay for more government spending. All government spending is fully offset with spending cuts and government reforms.”

But some of the details of the deal could anger Senate Democratic liberals, such as a provision that would reduce the number of weeks an unemployed person could receive jobless benefits from 93 to 63 in most states.

The Republican aide said the deal included a provision requiring jobless beneficiaries to search for a job as well as language allowing states “to drug screen workers seeking a job that requires a drug test or who lost a job due to a failed drug test.”

Conferee Rep. Tom Price said before the meeting that he thought any deal to extend the payroll tax holiday without paying for it would lose significant Republican support — even, potentially, his.

“I’d have to see the specifics,” the Georgia Republican said. “It’s been problematic. As you know, I’ve been supportive of making sure all of these items are paid for.”

And freshman Rep. Dennis Ross, an early critic of the payroll tax holiday, said he couldn’t see himself voting for any extension of the payroll tax holiday. Instead of voting on principles, he said, the plan is about the electoral politics of 2012.

“I’m very skeptical that this can be something that I can support,” the Florida Republican said. “We just want to get it off the table as a distraction, and when we start doing that, we should start stepping back from the table and reassessing our principles.”

If a larger deal does not have the GOP Conference’s blessing, sources say, House Republican leaders could move forward with their backup plan to bring forth a stand-alone, unpaid-for payroll tax cut extension that does not include the doc fix or jobless benefits. Given that those votes had been scheduled for Wednesday, they could provide a window into how much GOP backing they could count on for the larger deal as well.

Either way, Republicans may need substantial Democratic support for both measures in order to secure passage.

House conferee Fred Upton (R-Mich.) added that he hopes the deal can be wrapped up Wednesday and be on the House floor later this week.

Before talk of a deal broke today, House Minority Leader Nancy Pelosi (Calif.) announced that Democrats would back the stand-alone payroll tax cut bill floated by Republican leaders.

“We have long proposed bringing this tax cut to the floor without payfors and House Democrats will support it so that taxes are not raised on 160 million working Americans, but this should not be a substitute for the work of the Conference Committee,” Pelosi said in a statement.

But the larger deal is not yet done. Camp and Baucus were still wrestling with whether to include expiring tax extender provisions in the conference report. They were also still working out the details on the structure of the offsets for about $60 billion in unemployment and Medicare doc fix provisions. A source familiar with the talks said the most recent version included offsets such as spectrum auctions and savings from reforming federal workers’ pensions. Another source indicated that renewable tax credit extenders would be part of the deal. Reid noted today that he hoped “some of the extenders we’re concerned about” would be included.

Major progress in the talks began in earnest at the end of last week and continued through the weekend. Sources said they believe Wednesday will be crucial in determining whether either chamber will vote on the conference report — which can’t be amended — or if they will move on separate legislation that would have to start in the House.

Editor’s Note:

This article updates the print version to include reactions from House Majority Leader Eric Cantor.

Recent Stories

US-China tech race will determine values that shape the future

What’s at stake in Texas runoff elections on Tuesday

Democrats decry ‘very, very harmful’ riders in Legislative Branch bill

Biden welcomes Kenya’s Ruto with talk of business deals and 1,000 candles

Noncitizen voting bill advances as Republicans continue messaging push

At the Races: Don’t call him the next Mitch