Senate Dems may have way to extend unemployment benefits (photo: FEMA Photo Library)

Senate Democrats have a plan for the payroll tax cut legislation that House Republicans basically gave up on yesterday. When we last left our story, Republicans said that they would offer a bill in the House extending the payroll tax cut to the end of the year without an offset. This would mean that the extensions of unemployment insurance and the doctor’s fix to avoid a 27% cut to Medicare reimbursement rates would get orphaned, making it more difficult to pass them without the tax cut that has bedeviled the House GOP for weeks.

So Senate Democrats hit upon a solution:

A senior Senate Dem aide explains how Democrats might well proceed from here.

“We might amend it [the unpaid-for payroll tax cut] with UI and doc fix over here and…the amends would be hard for Republicans to vote against, because we have worked with Republicans to find pay-fors for those pieces that are attractive to them.”

The doc fix and UI extensions cost together about $60 billion — Dems think they can cover that cost over 10 years in ways that Republicans will have to accept. If that’s correct, the whole saga could end with a quick ping pong game between the House and the Senate.

The key to this would be finding the $60 billion in a way that Senate Republicans would accept. After that, it’s just a jam job to throw it to the House and dare them to block it as the clock runs down.

Incidentally, the GOP’s NBFs, the Catholic bishops, aren’t the ally on this one. They called yesterday for an extension of unemployment benefits.

So there’s no doubt that, if Senate Democrats could find the right mix of offsets to pay for that portion of the bill, there’s a path to passage available. Soon enough they’ll show their cards and tell us what’s in that $60 billion. As a result, offsetting what will be a $150-$160 billion package, all told, over the next year with $60 billion over ten years would provide the stimulative effect desired (though of course we’re only talking about the extension of current law). So if Senate Dems can pull this off, they will have defused another time bomb, and they could probably hibernate until about September, pass a continuing resolution to kick the budget out past the election, and be proud of their job well done in the 112th Congress.

Senate Democrats have a plan for the payroll tax cut legislation that House Republicans basically gave up on yesterday. When we last left our story, Republicans said that they would offer a bill in the House extending the payroll tax cut to the end of the year without an offset. This would mean that the extensions of unemployment insurance and the doctor’s fix to avoid a 27% cut to Medicare reimbursement rates would get orphaned, making it more difficult to pass them without the tax cut that has bedeviled the House GOP for weeks.

So Senate Democrats hit upon a solution:

A senior Senate Dem aide explains how Democrats might well proceed from here.

“We might amend it [the unpaid-for payroll tax cut] with UI and doc fix over here and…the amends would be hard for Republicans to vote against, because we have worked with Republicans to find pay-fors for those pieces that are attractive to them.”

The doc fix and UI extensions cost together about $60 billion — Dems think they can cover that cost over 10 years in ways that Republicans will have to accept. If that’s correct, the whole saga could end with a quick ping pong game between the House and the Senate.

The key to this would be finding the $60 billion in a way that Senate Republicans would accept. After that, it’s just a jam job to throw it to the House and dare them to block it as the clock runs down.

Incidentally, the GOP’s NBFs, the Catholic bishops, aren’t the ally on this one. They called yesterday for an extension of unemployment benefits.

So there’s no doubt that, if Senate Democrats could find the right mix of offsets to pay for that portion of the bill, there’s a path to passage available. Soon enough they’ll show their cards and tell us what’s in that $60 billion. As a result, offsetting what will be a $150-$160 billion package, all told, over the next year with $60 billion over ten years would provide the stimulative effect desired (though of course we’re only talking about the extension of current law). So if Senate Dems can pull this off, they will have defused another time bomb, and they could probably hibernate until about September, pass a continuing resolution to kick the budget out past the election, and be proud of their job well done in the 112th Congress.

David Dayen

David Dayen