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Income Gap Takes the Spotlight

Bill Clark/CQ Roll Call File Photo
Senate Democratic Policy and Communications Center Chairman Charles Schumer said a recent poll affirms his Conference’s strategy to push for a payroll tax cut.

Democrats, who control 53 Senate votes, have repeatedly failed to win the 60 votes needed to cut off debate when they previously have attached a millionaires' tax to other jobs legislation, including those intended to keep teachers and first responders on the job and to increase infrastructure funding.

But Schumer said he believes public pressure and Senate Democratic tactics will eventually lead to legislative results.

"I think it will help politically, but I think it will also get results before the 2012 election," Schumer said.

The first test likely will come on expanding President Barack Obama's payroll tax cut plan. Senate Democrats will try to bring to the floor, possibly this week, a bill sponsored by Sen. Bob Casey (D-Pa.) that would reduce the payroll tax rate for employees to 3.1 percent for 2012, as well as reduce it for employers. The $255 billion cost of the measure would be offset by a tax on those making more than
$1 million a year.

The payroll tax, which funds Social Security, is normally 6.2 percent, but Congress lowered the rate for workers in 2011 to 4.2 percent. That tax break is set to expire Jan. 1.

Casey's bill is unlikely to pass given Republican opposition, but Senate Majority Leader Harry Reid (D-Nev.) said in a conference call with reporters Monday that he intends to hold up to three votes on the payroll tax cut, possibly with other offsets and possibly without a pay-for that prevents it from adding to the deficit.

Schumer noted that many Republicans supported a recent bill that provides tax incentives for hiring veterans. The proposal, which was signed into law, was part of Obama's $447 billion jobs package.

"We thought they wouldn't pass any of our jobs measures, and they did pass one the veterans one," Schumer said.

Schumer acknowledged that the veterans jobs legislation which also included a Republican-friendly repeal of a requirement that federal, state and local governments withhold 3 percent of nearly all of their contract payments beginning in 2013 was the product of a negotiation and that Democrats would not rule out lowering their goals by settling for a simple extension of the current payroll tax break.

"We don't mind negotiating," Schumer said, though he prefers Obama's expansion. "I think, at the end of the day, they are going to have to allow the payroll tax to [at least] remain in effect," Schumer added. "Its just too heavy a load for them to resist, particularly after spending so much time defending tax breaks for people who make above a million dollars."

His comments came as the White House signaled that it, too, was open to negotiating with Republicans to pass Obama's proposed payroll tax cut and other jobs measures.

However, a senior administration official said Monday that the automatic spending cuts triggered by the failure of the super committee to reach a deal would be "off limits." Obama has said he would veto legislation seeking to roll back the $1.2 trillion in automatic cuts, nearly half of which would come from the Defense Department.

Steven T. Dennis contributed to this report.

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