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Payroll Tax and Unemployment Insurance Bill: Haggling Over Pay-Fors

About to get bogged down in arguments about "pay-fors" (photo: Dave Reid, flickr)

In its first day back, Congress held a quorum call and voted on a new Sergeant-at-Arms. That’s it. It’s going to be that kind of year.

Today, there’s a “resolution of disapproval” on the President’s request for another tranche of debt limit funds. You’ll recall that this is the request the Administration delayed so that the House could make this resolution of disapproval vote today. The vote, however, is nothing so much as grandstanding. Even if it passes the House, it won’t pass the Senate. We know that because the last resolution of disapproval on releasing debt limit funds didn’t pass the Senate. And if enough weak-kneed Democrats want to avoid a vote against the resolution of disapproval, even though EVERY ONE OF THEM ALREADY MADE IT last year, and the resolution passes, the President can veto it, and there are not 2/3 votes to override the veto.

So the first two days of the second session of the 112th Congress has consisted of a day of basically nothing, and a day with a meaningless resolution. And by the way, the House is leaving for the rest of the week. Congress, earning those 8% approval ratings every day.

As for legislation on the payroll tax cut, extended unemployment benefits and a doctor’s fix, which expire at the end of February, a think a lot will be made clear after the House Republican caucus’ issues conference that starts tomorrow. Jonathan Weisman writes that we could see a brisk agreement:

Senior Democratic aides say they are entering the tax negotiations in a strong position after House Republicans yielded to bipartisan political pressure and passed a two-month extension of the two-percentage-point payroll tax cut just before the winter break.

Republicans, eager to avoid another bruising fight, have signaled that they will drop the most controversial provisions in the version of the yearlong extension passed by the House earlier in December. Those include efforts to block environmental regulations on boilers and carbon emissions and to allow states to impose drug tests on recipients of unemployment benefits.

Democrats have retreated from their effort to raise taxes on incomes over $1 million to finance the extension of a tax cut for most working Americans, stave off a 27 percent cut in Medicare payments to doctors and extend expiring unemployment benefits. But they do not seem ready to give much more ground.

“We feel all the concessions going forward need to come from them,” said one senior Senate Democratic official, who requested anonymity to discuss negotiating strategy. “We won’t shy from using the political high ground.”

Read the whole thing. Basically, we’re down to finding acceptable pay-fors to cover the $170 billion remaining cost to extend these measures through 2012 (and possibly another $35 billion for other tax extenders which expired at the end of last year). The most acceptable pay-for would be to not pay for them at all. You can closely follow that with capping overseas contingency funds (read: war spending) and writing off the savings. It’s unlikely we’ll see either of those outcomes. But we could see some token measure, like rolling back the corporate jet loophole or some other subsidy, in addition to whatever else stays in the package.

There’s a sense that House Republicans want to get this done quickly. But they also have pressure from their Tea Party wing, which has constrained John Boehner every single time. And Democrats, finding themselves in a strong position, have no interest in moving off their demands, figuring they’ll win politically either way. I think this will become clear over the next 72 hours.

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David Dayen

David Dayen