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Division Over Payroll Tax Widens

Democrats’ Wish List Increases Difficulty of Finding Bipartisan Deal

Tom Williams/CQ Roll Call
Senate Majority Leader Harry Reid told reporters he wants the payroll tax cut conference committee to include extenders for more than 80 tax provisions that expired at the beginning of the new year.

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Top Senate Democrats on Tuesday called for a package of tax extenders to be included in payroll tax cut conference committee discussions, adding yet another hurdle to the already arduous path to a bipartisan deal.

Conferees met for the first time Tuesday afternoon and showcased the wide gulf between the parties on the must-pass legislation and other provisions the parties want to include. The bicameral panel has about a month to craft a deal, or payroll taxes will go up for millions of Americans.

Already far apart on extending and paying for a payroll tax holiday, unemployment insurance benefits and a fix to doctors’ Medicare payments, Republicans dug in on the construction of a controversial oil pipeline and on the reversal of environmental regulations. Democrats resurrected their desire to impose a surtax on millionaires.

Before the meeting, Senate Majority Leader Harry Reid told reporters that he wants the committee to expand its portfolio and include extenders for more than 80 tax provisions that expired at the beginning of the new year, such as deductions for tuition expenses, state and local taxes and teachers’ out-of-pocket expenses.

“All these [tax credits] are extremely important and are job-creating in and of themselves,” the Nevada Democrat said. “I am afraid if we don’t do it now with this conference, we are not going to do it until the end of the year and a lot of businesses will be hurt.”

Sen. Max Baucus, co-chairman of the conference committee, led off the Tuesday meeting by stating that the group has an “opportunity” to extend those measures.

“We must pass as many of these provisions as possible for the remainder of 2012,” the Montana Democrat said. “They will help deliver the jobs and economic growth we need.”

Republicans, particularly Sen. John Barrasso, insisted that a provision to hasten approval of the Keystone XL oil pipeline be included in any final deal the committee produces. Ahead of Tuesday night’s State of the Union address, the Wyoming Senator challenged President Barack Obama on his decision earlier this month to deny a permit to build the pipeline.

“We need to put politics aside and build [the] Keystone XL pipeline now,” Barrasso said. “If the president really believes that ‘We can’t wait,’ as he says about American job creation, he should immediately reverse his Keystone XL decision.”

Obama administration officials have said they did not have enough time under a Congressionally mandated 60-day period to properly vet the project at this time but that backers are free to reapply for another permit.

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