9:46am

Mon February 13, 2012
All Politics are Local

Deal on Payroll Tax Cut Unlikely

The short-term extension of the payroll tax cut is set to expire at the end of this month, and U.S. Rep. John Yarmuth, D-Ky., is skeptical a compromise can be reached. In December, Congress was embroiled in a partisan debate over the issue, but was able to broker a deal to extend the relief for an additional two months. A 20-member conference committee is now discussing whether and how to pay for a further extension of the two percent tax break for nearly every working American.

But negotiations are reportedly going so badly that lawmakers expect the cut to expire by the February 29 deadline.

Yarmuth says the committee members have yet to find common ground and underscores that pessimism is high in Washington over the deal.

“It appears that we are in virtually in the same position we were two months ago and unfortunately there are very few days left where we’re scheduled to be in session in order to come to an agreement. And speaking with some of the conferees, they are no closer to an agreement than they were two months ago,” he says.

 

Democrats are expected to outline a number of payment options, including closing of tax loopholes for large companies. But House Republican leaders charge that their colleagues across the aisle are not willing to engage and are jeopardizing a potential compromise.

House Budget Committee Chairman Paul Ryan, R-Wis., had this to add:

From TPM:

Yeah, it seems as if the parties — the president’s party leaders are more or less not engaging in these conversations. We have offered literally scores of different offsets. We’ve taken provisions from the president’s own budget as ways of paying for this payroll tax holiday, yet they continue to insist on not agreeing to those kinds of things.

So I don’t know where this is going to come down to it. I do believe this will get extended. But when we make offer after offer based on policies that we know Democrats and the president have supported in the past, yet they still insist on not coming to agreement, it’s difficult to see exactly how this is going to pan out.

Within the payroll tax deal, Congress is also negotiating an extension of added unemployment benefits and a measure to prevent a cut in fees for doctors who accept Medicare. As with the previous extension debate two months ago, Democrats and Republicans are gridlocked over how to pay for the relief.

“I’m not optimistic that we can come to an agreement to extend those three items through the end of the year. I’m not at all confident they can come to an agreement by the end of this month,” says Yarmuth.