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GOP Cautious in Payroll Tax Fight

Bill Clark/CQ Roll Call File Photo
Senate Majority Leader Harry Reid (left) and Minority Leader Mitch McConnell have appointed conferees to work out a one-year extension of the payroll tax cut by February.

Sources close to leadership, the failed Joint Committee on Deficit Reduction and the conferees all seem to agree that the task at hand should not be too difficult: Previous negotiators have provided the new group of lawmakers an expansive menu of offsets to cobble together for the full-year package.

Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) were very close to a full-year agreement at the end of 2011. House Republican leaders had been preparing to present a full-year extension to their Conference when the larger negotiations broke down, and the two Senate leaders struck the two-month agreement.

The major sticking point became how to pay for the legislation, even though negotiators were more than halfway to the projected $190 billion price tag of the full package.

“I hope this Congress has had a very good learning experience, especially those who are newer to this body. Everything we do around here does not have to wind up in a fight. That isn’t the way things need to be,” Reid said at a year-end press conference on Dec. 23. “I have instructed ... my four Senators, there is nothing off the table. Everything’s on the table.”

A complicating factor for all parties will be the White House. President Barack Obama has been newly emboldened by House Republicans’ December flub on the short-term deal. And he has had great success running against Congress, even if at times he fails to distinguish “Congressional Republicans” from “Congress” — much to the dismay of Democrats.

On Friday, the administration announced its intent to include a federal pay increase in its fiscal 2013 budget. But in December, Reid and McConnell were considering including a pay freeze extension as an offset to the payroll tax cut package. House Republicans included the freeze in their approved legislation that will be the basis of the conference report.

It’s unclear how directly the White House will be involved in forcing Congress’ hand, and the administration may have the least to lose if the conference committee fails. The inability of Congress to come to an agreement would only further the White House’s narrative that Capitol Hill is where the American people should direct their ire in
Washington, D.C.

Skeptics have expressed concern that the conference committee, a rarely used legislative formality, will be a “super committee 2.0,” a snarky allusion to the most recent in a long line of budget negotiating groups that failed to come to any sort of deal. Six of the conferees were on the super committee.

At the end of last year, Reid bristled at the idea that the payroll group was destined to fail.

“Well, of course, this is a different, totally different program than the super-committee,” Reid said in December. “The reason I went to [some] lengths to describe who all my conferees are is I want to make sure that everyone understands from our perspective this is a new day.”

Normal conference committee processes can be completed within a matter of days, particularly on a smaller bill such as the one being considered. But it’s possible both sides could drag out what could be an easy process for political gain, especially with a national election intensifying as a backdrop.

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