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Reid Hopes for Payroll Tax Vote Tonight

Bill Clark/Roll Call

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Senate Majority Leader Harry Reid (D-Nev.) said he is working with GOP leaders to bring up dueling votes on the payroll tax holiday this evening, but an impasse between Democrats and Republicans over how to pay for the measure will likely cause both bills to fail.

Reid and Senate Democrats dug in on their proposed extension — and expansion — of an expiring payroll tax holiday, with the Majority Leader saying he is not ready to concede on the Democratic proposal even in the face of GOP opposition.

“Republicans have talked for years that they want small business to be incentivized, to create jobs — that’s what our legislation does,” Reid told reporters in a rare Thursday stakeout. “Small businesses, people who have payrolls of less than $15 million a year have a benefit of significant measure. ... We’re going to stick with that. It’s the right thing to do. We need to do more rather than less.”

But in order to consider the payroll tax cut today, Democrats need an agreement with the GOP. Reid filed cloture on a motion to take up the Democratic bill Wednesday, setting up a Friday vote unless an agreement can be reached to move it up.

“What we would be willing to do ... is agree to have them tonight,” Reid told reporters today. He said he would prefer to have the vote earlier in the evening, but he said that was still being negotiated.

If no agreement can be reached, “We may have to spill over into tomorrow to finish what we are doing on the payroll tax,” Reid said.

The Democrats’ bill would extend and expand the current payroll tax cut for workers, dropping the 2012 rate to 3.1 percent from the 4.2 percent paid in 2011. The Democratic bill would also cut the payroll tax in half for employers on the first $5 million of taxable payroll for 2012.

The pay roll tax, which funds Social Security, is normally 6.2 percent, a rate employees would return to if the tax break is allowed to expire Jan. 1.

The $265 billion cost of the legislation would be paid for with a 3.25 percent tax on those making more than $1 million a year.

Republicans argue that the millionaires tax would slow the economy and harm small businesses and have offered an alternative to extend to current payroll tax break.

The GOP counterproposal would be offset by extending the current pay freeze for federal workers by three years, trimming the federal workforce by 10 percent and means testing programs such as Medicare, unemployment insurance and food stamps so that benefits are reduced for upper-income earners.

The offset would cover the cost of the extension and reduce the deficit by $111 billion over the next decade.

Both measures are expected to fail to win the 60 votes needed to overcome filibusters.

At a press conference that followed a caucus meeting with White House Council of Economic Advisers Chairman Alan Krueger, Reid said the Democratic bill would put more money in the pockets of Americans.

While the current tax cut amounts to about $1,000 in savings for a family making $50,000 a year, the Democratic plan would save the same family $1,500, Democrats said.

Reid said the Republican plan would cut middle class jobs by reducing the federal work force.

Democrats also pounced on a perceived opening created by Sen. Susan Collins (R-Maine), who has been advocating for a modification of the millionaires tax that would carve out small-business owners, a prime concern for the GOP.

Senate Democratic Conference Vice Chairman Charles Schumer (N.Y.) appeared warm to the idea today, at a minimum to put the pressure on the opposition to try to play ball.

“Yesterday I saw Susan Collins endorse a version of the millionaires tax cut. I’d be happy to sit down with her and hear her ideas and perhaps we can work out a bipartisan version,” Schumer said. “Other Republicans like Pat Roberts and Mike Johanns — both from the Republican heartland — joined Collins in saying they were open to a form of making millionaires pay their fair share.”

Most Republicans, however, have argued that many of the offsets in their bill are part of the proposals developed by the bipartisan deficit commission established by President Barack Obama last year and headed by former Clinton administration Chief of Staff Erskine Bowles and former Sen. Alan Simpson (R-Wyo.).

“There’s no reason folks should suffer even more than they already are from the president’s failure to turn this jobs crisis around,” Senate Minority Leader Mitch McConnell (R-Ky.) said on the Senate floor today. “But there’s also no reason we should pay for that relief by raising taxes on the very employers we’re counting on to help jolt this economy back to life.

“We wouldn’t be helping anybody by making it less likely that small businesses actually start hiring people again,” McConnell said.

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