GOP Chair, Ways and Means Rep. Dave Camp (R-MI 04)

The conference committee for the payroll tax cut is on a road to nowhere, and it’s clear that the House and Senate leadership will have to step in if the payroll tax cut, unemployment insurance and the doctor’s fix will get extended beyond the end of the month.

House Ways and Means Committee Chairman Dave Camp’s private assessment of the payroll tax debate is pretty bleak.

Late Monday afternoon in Speaker John Boehner’s office, the Michigan Republican told House GOP leadership that the negotiations to extend the tax holiday seem like a replay of the disastrous deficit supercommittee, according to several sources present.

Democrats are dragging out negotiations because they think it helps them politically, and Senate Majority Leader Harry Reid (D-Nev.) won’t let Sen. Max Baucus (D-Mont.) cut a deal, Camp told GOP leaders, according to the sources. No one besides Baucus, Camp said, is willing to make the decisions necessary to move forward — two assessments not shared by Democrats.

I don’t view Camp as a reliable narrator. But it’s clear that the gulf between the two parties on this issue is pretty wide. Republicans, already fearing an actual recovery that will help the President in November, are split on whether to extend the payroll tax measure, with some members of the GOP wary of giving the President a “win” and others wanting to get the issue over with before risking another debacle like what we saw at the end of last year. Some Republicans have dug in over ancillary issues like voiding the EPA boiler rule as part of the deal. And nobody really knows how to get enough in pay-fors to offset the bill’s cost, which could be as high as $160 billion.

Because this extends to the doctor’s fix to avoid a sharp cut in Medicare reimbursement rates, it ties in the health care issue as well, which has been a source of major contention on Capitol Hill. A ten-year doc fix to permanently reset the reimbursement rates would cost $300 billion, and while the idea of using a cap on war funding to pay for it is attractive to some, that deal has not yet come together. In particular, Camp has vetoed the idea, saying that the conference committee can only resolve differences between the House and Senate bills, and because the war funding issue didn’t appear in either, it stands “outside the scope” of the committee’s work.

That means that the easiest and most agreeable pay-for cannot get used, at least according to Camp. Which makes the resolution a much steeper climb. This also increases leverage for the pay-fors that Republicans want to use, like a federal pay freeze and cuts to the federal workforce.

The possibility exists for agreeing to a number of smaller pay-fors and reducing the time frame of the payroll tax cut, extended UI and the doc fix. But the larger possibility, it seems, is that the House and Senate leadership, along with the White House, will have to get involved in the negotiations in order for them to pass. And that could wind up as a replay of last December, with John Boehner making deals his caucus opposes, reneging on them, only to flip back at the last minute due to negative publicity.

Alternatively, everything could expire. We only have a little over three weeks to go.

David Dayen

David Dayen