–Senate Majority Leader Reid Says New Dem Plan Is ‘Compromise’
–But Senate Minority Leader McConnell Says Plan Is ‘Designed’ to Fail
–Intense Talks On Payroll Tax Cut Extension Expected Next Week

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid has said the
Senate will hold a procedural vote Friday on a revised Democratic
payroll tax cut extension plan, but few lawmakers from either party
expect the new plan to gain much traction.

To move forward in the Senate, the new Democratic bill will require
60 votes, a highly unlikely scenario.

Both parties are poised to spend much of the ten days — and
perhaps beyond — battling over the details of renewing the payroll tax
cut and other expiring tax provisions.

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 Senate Democratic 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.

President Obama and most Democrats in Congress wanted to further
reduce the employee payroll tax to 3.1 percent and to cut the employer
share of the payroll tax from 6.2 percent to 3.1 percent for the first
$5 million of a company’s wage costs.

The new Senate Democratic plan drops the employer tax cut.

A Senate Republican plan to extend the payroll tax cut by a freeze
on federal salaries and hiring failed last week.

Republican Senator Susan Collins and Democratic Senator Claire
McCaskill are working on a compromise plan that would extend the current
payroll tax cut for individuals for another year and reduce the payroll
tax on employers to 4.2% for the first $10 million in a company’s
payroll.

The Collins-McCaskill package has an assortment of other tax and
infrastructure provisions. It would be paid for by imposing a 2% surtax
on income above $1 million, but would exempt small firms that pay taxes
through the individual income tax code.

House Republicans are preparing an alternative payroll tax
extension package that would cost about $200 billion and would be paid
for by entitlement and other savings.

At a briefing Tuesday, Reid said before the Senate leaves
Washington for the Christmas holidays it must pass an extension of the
payroll tax cut, unemployment insurance benefits, a renewal of various
other expiring tax provisions, the so-called “doc fix” and an omnibus
spending bill for the 2012 fiscal year budget.

“We are not going to leave Washington,” until these measures are
dealt with, Reid said.

Reid said talks surrounding the FY’12 omnibus spending bill are
progressing, but added “we still have a ways to go.”

House and Senate leaders hope to complete work for the year on Dec.
16, but that date could easily slip by several days or even a week.

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

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