Reported by Sam Stein

 

WASHINGTON — As the United States Senate considers yet another variation of the payroll tax cut, there appears to be little common ground over how the measure should be paid for. Democrats, along with one Republican, continue to argue for a small surtax on millionaires. Republicans either balk at that proposal or say they don’t support extending the payroll tax cut at all.

The impasse is unlikely to be bridged by the time the newest bill comes to the floor on Thursday, leading operatives to suggest that it would simply be easier to pass the payroll tax cut extension without paying for it.

Longtime anti-tax advocate Grover Norquist said he would prefer to see the tax cut accompanied by an equivalent reduction in spending to make up for the decrease in revenue. He and other conservatives said that if spending offsets do not accompany the tax cut, it would be harder for Democrats to argue against other such tax cuts, including a repatriation holiday on corporate taxes.

“No to a tax increase, yes to extending it without a quote, unquote ‘pay for,’ and the preference is to do it with spending cuts as the offset,” said Norquist. “The worst thing you can do would be to extend it with a permanent job-killing marginal tax increase. You would end up with permanent marginal tax rates in exchange for a temporary reduction in tax rates on Social Security.”

When the payroll tax cut was first introduced at the end of 2010, there was no talk about how it would be offset. Instead, it was passed as part of an agreement to extend the Bush tax cut for an additional two years. The estimated $860 billion price tag was simply put on the books.

So why not do the same now, when the price tag is significantly lower — $185 billion to reduce the employee’s share from 4.2 percent to 3.1 percent of wages, along with other tax policy changes — and Republicans have, as a matter of ideological principle, argued that tax cuts pay for themselves?

The question was posed to two senior Obama administration officials during a briefing with reporters yesterday. And while they continued to argue that there were easy ways to cover the payroll tax cut — while needling Republicans for suddenly insisting that tax cuts be offset — they never explicitly said it had to be paid for.

// // “So we still think that the payroll tax, unemployment insurance, any other jobs measures can be paid for in a responsible way,” one said. “The important thing here, though, is that this get done.”

Reminded that, at least as far as unemployment insurance is concerned, the president has consistently held that such emergency expenditures don’t need to be offset, the official replied: “I don’t think the president’s longstanding position on that has changed. But there is a way of paying for it that was put forward in the American Jobs Act.”

And therein lies the problem. While both Republicans and Democrats privately admit that they have been and would be comfortable with letting tax cuts continue without offsets, neither will say so publicly, lest their commitment to deficit reduction be questioned.

Top congressional Republican aides argue that a payroll tax cut extension without offsets isn’t necessarily easier to pass than one paid for by a millionaire’s surtax. But the reasoning behind that argument has more to do with timing than philosophical disputes.

Congress will be voting on major appropriations bills before the Christmas recess. To have them turn around and stack $185 billion on the deficit would be too much to ask, the logic goes.

“The president said in his speech to Congress and in speeches since, that ‘everything’ in the bill will be paid for,” Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), said in an email. “I think it will be MUCH easier to pass it if they take out the poison pill of a tax hike on job creators; a tax hike, by the way, that has bipartisan opposition.”

A top House aide was more blunt. “I don’t think either would pass the House,” the aide explained, when asked about a payroll tax cut extension without offsets and one that was paid for with a millionaire’s surtax. “So it’s a ‘would you rather burn to death or drown’ type of question.”

As reported by Jennifer Bendary from Huffington Post

WASHINGTON — Senate Democratic leaders have settled on which piece of President Barack Obama’s jobs plan they want to move on first: $35 billion for state and local governments to rehire teachers, police and firefighters.

“Our expectation [is] that the first measure will be teachers,” White House Press Secretary Jay Carney said during a Monday press gaggle aboard Air Force One.

“I didn’t want to get ahead of Senator Reid,” Carney said of breaking the news. “We have been in consultation with him, but it’s his prerogative and we’re very pleased that he will be taking it up.”

During a conference call, Senate Majority Leader Harry Reid (D-Nev.) said he plans to unveil the Teachers and First Responders Back to Work Act later Monday and decide “in the next day or two” when to hold a vote on it. He said the bill would keep 400,000 teachers and first responders on the job, and would be paid for by imposing a 5 percent tax on millionaires.

Asked which pieces of Obama’s jobs plan are next in line for Senate votes, Reid demurred. But he said he has already settled on the next four votes on pieces of Obama’s bill and is waiting to meet with the Democratic Caucus on Tuesday before discussing his plan publicly.

“There is no reason we cannot finish the appropriations bills before the end of the week, and have a vote on this jobs bill,” Reid told reporters on the call. “I am happy to keep the Senate in session as long as needed to make sure we get a vote on this jobs bill.”

Reid’s office also sent out a fact sheet that highlights past votes and statements by Republicans in favor of jobs bills similar to the teacher/first responders aid bill. The fact sheet cites a May 2010 press release by Senate Minority Leader Mitch McConnell (R-Ky.) saying he was “proud” to help secure funds for first responders. It also points to a March 2007 vote to fully fund the COPS program; it included the support of 16 GOP senators.

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During a speech earlier Monday in Fletcher, N.C., Obama knocked Senate Republicans for voting down his entire $447 billion jobs package last week. All Republicans opposed a procedural vote to begin debate on the bill, along with two Democrats. Obama said his push to break out pieces of his bill and hold individual votes on them gives Republicans “another chance” to act on jobs.

“Maybe they just couldn’t understand the whole thing all at once,” Obama said, drawing laughs from the crowd of supporters. “So we’re going to break it up into bite-sized pieces so they can take a thoughtful approach to this legislation.”

“So this week, I’m going to ask members of Congress to vote on one component of the plan, which is whether we should put hundreds of thousands of teachers back in the classroom and cops back on the street and firefighters back to work.”

Of course, the reality is that Republicans are poised to vote against any piece of Obama’s plan because they don’t like how it is paid for: by raising taxes on millionaires and ending subsidies for the oil and gas industry. But with the 2012 elections in mind, Obama and Democratic leaders plan to keep lining up votes anyway to build the case that Republicans are voting against jobs and the economy in the name of protecting corporate interests.

This story has been updated with information on Senate Majority Leader Harry Reid’s conference call Monday.