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Payroll Deal Deadline Looms

Tom Williams/CQ Roll Call
House Ways and Means Chairman Dave Camp (center) has met with Senate Finance Chairman Max Baucus (left) in an attempt to make progress on a payroll tax cut deal.

Throughout the process, the same issues that have defined the 112th Congress, from the negotiations led by Vice President Joseph Biden on a debt ceiling deal to the Joint Committee on Deficit Reduction, still face these lawmakers — particularly when it comes to taxes.

In a public meeting last week, Republican conferees proposed an extension of a federal worker pay freeze, health care premium adjustments and further Medicare prescription adjustments for higher-income beneficiaries. Democrats rejected those offsets on the spot.

“We put up what we thought were three of the most easy ones to get and everyone rejected them,” said Sen. Mike Crapo (R-Idaho), a conferee. “So at this point, we’re waiting to see what the Democrats come back with.”

Democrats, confident that they are in a good negotiating position after December’s House Republican flameout over the payroll tax cut extension, put the heat on their counterparts Wednesday evening with an offer on unemployment insurance benefits that included no offsets.

“We made a proposal. The ball is in their court to make a counterproposal,” conferee Rep. Chris Van Hollen (D-Md.) said Thursday.

The federal pay freeze had been one of the final offsets considered by Reid and McConnell before their full-year extension talks collapsed at the end of last year, but a source indicated that in these talks, “Democrats have taken a hard line on the pay freeze.”

Lawmakers need to come to an agreement by Feb. 29; otherwise, the payroll tax cut, unemployment benefits and a staving off of cuts to Medicare doctor reimbursements will lapse.

This week could be a crucial one for the committee, as it could reveal some of the final positions taken by the parties. Senate aides suggested that Reid might bring to the floor some iteration of what Baucus floats this week.

Despite the apparent lack of progress with only two and a half weeks left before the deadline, lawmakers of both parties seem loath to pass another short-term extension.

“I want these negotiations to succeed. We’ve got to reach a conclusion to it and nobody I know of is talking about a short-term extension,” conferee Sen. Jon Kyl (R-Ariz.) said.

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