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Payroll Tax Pressure Balloons

Republicans Say Democrats’ Insistence on Keeping Millionaire Surtax Shows Plan Is Political Theatrics

Chris Maddaloni/CQ Roll Call
A Republican leadership aide said Speaker John Boehner’s tax plan hinges on including some GOP deregulation and jobs bills as sweeteners, such as reducing Clean Air Act regulations for boilers and legislation addressing the Keystone XL oil pipeline.

Senate Democrats unveiled yet another plan Monday to extend a popular payroll tax holiday, but the political theater surrounding their move — including an appearance by President Barack Obama in the White House briefing room — seemed designed to score a public relations win and increase pressure on the GOP.

In a concession to Republicans, Democrats dropped a proposed payroll tax break for employers but continued to insist on deeper cuts on the amount employees pay. They also amended their proposal on how to pay for the legislation, adding bipartisan spending cuts as well as means-testing of unemployment and food stamps benefits similar to those offered in a Senate Republican payroll tax cut bill last week.

But Democrats also included a more modest millionaires surtax, a provision they’ve been trying to enact into law for months but one that Republicans have repeatedly blocked. Adding the millionaires surtax yet again, Republicans say, shows that the Democrats’ new plan is more about political gains — especially on a measure that is likely to command bipartisan support in the end.

Republican and Democratic aides said the payroll tax cut, which is set to expire Jan. 1, will be extended by Congress in an end-of-the-year catch-all package. But that measure — which is likely to include extensions of unemployment benefits and increased Medicare payments to doctors — will probably have to originate in the Republican-controlled House.

The exact composition of that package, and how it might be paid for, is still very much in flux. And lawmakers are hoping the looming Christmas holiday will force their opponents’ hands and prevent either side from tacking on sweeteners for their conferences that could jeopardize final passage.

In the interim, Democrats appear to be relishing the opportunity to demagogue the issue.

On Monday, Obama arrived in the briefing room to deliver a statement to the media that liberally took shots at Republicans.

“Virtually every single Republican voted against that tax cut. Now, I know many Republicans have sworn an oath never to raise taxes as long as they live. How can it be that the only time there’s a catch is when it comes to raising taxes on middle-class families?” Obama said. “How can you fight tooth and nail to protect high-end tax breaks for the wealthiest Americans and yet barely lift a finger to prevent taxes going up for 160 million Americans who really need the help?”

House GOP leaders have been working to find a combination of unemployment insurance, the Medicare “doc fix” bill and a payroll tax cut extension that can pass muster with their conservative membership.

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