Optimism Grows for End of Impasse on Tax Cuts

Sunday, 04 Dec 2011 04:28 PM

 

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Senate Majority Leader Harry Reid will offer a new plan to extend payroll tax cuts and unemployment benefits set to expire this month, a Senate colleague said.

Senator Kent Conrad of North Dakota said Sunday on “Fox News Sunday” that fellow Democrat Reid told him a compromise package will be released Monday in an effort to break a political deadlock on the measures.

“He indicated to me it will be paid for,” Conrad said, adding that it’s a compromise between plans voted on last week. “It will be paid for in a way that’s credible and serious.”

Republicans and Democrats agreed on television talk shows Sunday that Congress is likely to reach a deal to extend the benefits. Unless Congress acts, legislation that lowered the employee portion of the Social Security payroll tax to 4.2 percent for 2011 from 6.2 percent will expire Dec. 31.

“We are still reviewing the details with our caucus,” Adam Jentleson, a Reid spokesman, said in an e-mail confirming Conrad’s remarks.

Senator Tom Coburn, an Oklahoma Republican, said no agreement exists on how to pay for the benefits. “Nobody is making hard choices now,” he said on the “Fox News Sunday” program. “What they are doing is promising a benefit and no pain now. It always comes later.”

Jobless Rate

President Barack Obama is urging Congress to extend the payroll tax cut, saying that letting it expire would be a “significant blow” to the economy. Obama said in his most recent weekly radio and Internet address that the tax cut saves the typical middle class family $1,000 a year.

“Now is the time to step on the gas, not slam on the brakes,” Obama said. “Unfortunately, too many Republicans in Congress don’t seem to share that same sense of urgency.”

The U.S. jobless rate fell to 8.6 percent in November from 9 percent the month before after employers added 120,000 jobs and 315,000 Americans left the labor force. The unemployment rate was the lowest since March 2009.

Massachusetts Representative Barney Frank, the top Democrat on the House Financial Services Committee, said “bad things will happen if nothing happens,” on ABC’s “This Week” with Christiane Amanpour. Frank added that “I think there will be a deal.”

Trading Blame

Republicans and Democrats have been trading blame for the impasse. Democrats say Republicans refuse to budge on their opposition to tax increases as a way to pay for the benefits, while Republicans say Democrats won’t agree to cut entitlement programs including Medicare.

The Senate last week rejected Democratic and Republican proposals to extend the payroll tax cut for a year. The Democrats’ plan would have expanded the cut to employers and imposed a 3.25 percent surtax on annual income exceeding $1 million as a way to pay for it. Democrats also want to extend unemployment benefits set to expire Dec. 31.

Republicans won’t agree to any proposal that increases the size of the national deficit, said Representative Fred Upton, a Michigan Republican.

“The keys, particularly from the Republican side, are that these things have to be paid for,” Upton said, speaking on Bloomberg Television’s “Political Capital with Al Hunt” airing over the weekend.

© Copyright 2014 Bloomberg News. All rights reserved.

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