–Senate Democrats, Republicans Block Rival Plans
–House GOP Calls On Obama To ‘Accept’ Their End of Year Tax Package
–House, Senate Appropriatiors Try To Craft $900 Billion FY’12 Package

By John Shaw

WASHINGTON (MNI) – Another week of testy tactical skirmishing on
Capitol Hill has left Congress no closer to an agreement on extending
the payroll tax cut, renewing uninsurance benefits, or passing other
important end-of-the-year items.

Congressional leaders have said they hope to adjourn for the year
by next Friday, but the continuing deadlock on the payroll tax cut
extension and other items could this target adjournment date back for at
least a few days and perhaps up to a week.

The futility of this past week seemed clear by Thursday afternoon
when Senate Republicans blocked a Democratic payroll tax cut extension
plan and Senate Democrats blocked a Republican plan.

What was most striking about this was that a week earlier the exact
same thing happened and during the week interval Senate Majority Leader
Harry Reid made only modest changes to his initial proposal and Senate
Minority Leader Mitch McConnell kept his entire plan intact despite the
fact that it garnered only 20 Senate votes the previous week.

Before the Senate votes, Reid said Republicans are “more interested
in passing tax cuts for millionaires than tax cuts for the middle
class.” McConnell accused Democrats of engaging in “political theater”
rather than trying to develop an acceptable payroll tax cut extension
plan.

Meanwhile, President Obama plunged into the rhetorical battle
Thursday, saying it’s imperative to get a payroll tax cut extension deal
this month.

“We are going to stay here as long as it takes to make sure that
the American people’s taxes don’t go up after January 1,” Obama said.

“Get it done,” he instructed Congress. “And if not, maybe we’ll
have a white Christmas here in Washington.”

The president’s tough words had no softening effect on House
Speaker John Boehner who formally released Friday a House GOP end-of-the
year plan that appeared designed to annoy if not infuriate the White
House. The Speaker called on the White House to “accept” his entire
package.

Boehner’s plan extends last year’s payroll tax cut for one year,
provides additional unemployment insurance benefits, and halts a
scheduled cut in Medicare physician reimbursements.

The plan is objectionable from the Democratic perspective because
of its inclusion of provisions to remove barriers to construction of the
Keystone XL project and a delay in a new pollution standard for
industrial boilers.

The House GOP package would cost about $195 billion, with about
$120 billion of the cost coming from the payroll tax cut extension. The
package is paid for by a host of spending savings including
minor adjustments to the Social Security and Medicare programs and
fees imposed on Fannie Mae and Freddie Mac. It would also freeze the
salaries of civilian federal workers through 2013.

Reid, the Senate Majority Leader, dismissed Boehner’s plan as
“partisan joke that has no chance of passing the Senate.”

However, Senate Minority Whip Jon Kyl has said that the House GOP
plan “is it,” adding “I don’t think there is any further negotiation.”

The Senate Democratic plan would cost about $180 billion and would
extend the payroll tax cut for a year. It would be paid for by a surtax
of 1.9% on individual income over $1 million that would be applied in
2013 and expire in a decade. The plan also secures $38 billion by
increasing fees on Fannie Mae and Freddie Mac.

Last year, the White House and Congress agreed on a tax cut package
that included reducing for one year the employee-paid share of the
Social Security tax from 6.2 percent to 4.2 percent.

The Senate Democratic plan would reduce the employee payroll tax to
3.1 percent.

As the battle over the payroll tax cut extension continues to rage,
a modicum of bipartisan comity has been evident as House and Senate
appropriations leaders try to craft a $900 billion spending package that
includes the 9 fiscal year 2012 bills that have not been approved.

The negotiators are trying to assemble a final package by Monday or
Tuesday so the spending bundle can pass Congress by the end of
next week. A stop-gap bill funding the federal government expires next
Friday.

Congressional leaders have said they would like to complete the
FY’12 budget by the end of next week.

“After all, fiscal year 2013 is right around the corner,” said
House Appropriations Committee Chairman Harold Rogers Thursday.

FY’12 began on Oct. 1 of this year.

** Market News International Washington Bureau: (202) 371-2121 **

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