Reid determined to cut taxes on middle class

By Karoun Demirjian

Thursday, Dec. 8, 2011 | 2 a.m.

Sen. Harry Reid is serious about making sure Congress doesn’t give middle-class Americans the heartfelt holiday gift of a tax increase. So serious that he’ll cancel Christmas if he has to, to make sure a payroll tax cut bill gets passed.

“We will make sure we pass this tax cut for the middle class,” Reid said. “We can do it the easy way, or we can do it the hard way.”

President Barack Obama is on board with Reid’s plan: “He said, ‘Michelle and the girls are going to have a great time in Hawaii, they don’t need me there,’ ” Reid informed reporters Tuesday.

Things probably won’t reach that point in the Senate, where most Republicans and Democrats agree that the payroll tax cut Congress instituted last December should be extended into the coming year; they just can’t agree on how much to extend it by, or how to pay for it.

But after weeks of arguments and even a couple of votes, the parties haven’t resolved the issue, and it’s threatening to push other must-do items into the holiday break.

Before the Senate disbands until mid-January, they have to approve a budget (they actually have to do that by next Friday), pass an extension of the payroll tax cut, pass an extension of unemployment insurance, and vote on the president’s nominee to head the new Consumer Financial Protection Bureau and the Balanced Budget Amendment.

If they don’t, Reid said he won’t let them go home.

And if that happens, Reid blames the Republicans in the Senate and the House.

“(They) continue to squander valuable time by trying to appease the Tea Party. The choice is up to the Republicans,” Reid said. “They have these softballs floating around out there and they can’t even see them ... if they could just relax for a minute and catch one of these softballs floating around, I think everybody would be better off.”

Softballs or not, there has been plenty of paper flying this week as lawmakers swap out versions of their payroll tax cut bills with “compromise” legislation.

Last week, the Senate shot down one Democratic and one Republican payroll tax cut proposal. The Democrats’ version, sponsored by Pennsylvania Sen. Bob Casey, would have expanded the existing cut — a drop from 6.2 percent to 4.2 percent of income is what was adopted last year; Casey’s bill would lower the payroll tax to 3.1 percent for all workers and for the first $5 million of every employer’s payroll, and pay for it with a 3.25 percent tax on income over a million dollars. The bill got a majority, but not enough votes to clear a filibuster.

The Republican version, sponsored by Nevada Sen. Dean Heller, would have simply extended the existing cut, and paid for it by shrinking the federal workforce, raising Medicare rates on upper-income Americans, and preventing millionaires from getting unemployment benefits or food stamps. It got only 20 votes, while 78 senators voted no.

This week, Casey and the Democrats came back with a compromise: same expansion of the payroll tax cut, but include the Republicans’ idea of prohibiting millionaires from collecting unemployment and food stamps; a change that let them reduce the surcharge on million dollar-plus incomes from 3.25 percent to 1.9 percent.

Meanwhile, moderate Republican Susan Collins and moderate Democrat Claire McCaskill have been shopping an alternative that would simply extend the tax cut for workers, additionally make the first $10 million of employers’ payroll eligible for the same cut and institute the surcharge for million dollar-plus incomes but make some small businesses exempt.

But the signal everyone’s waiting on won’t come from the Senate: Republican leaders in the House called a conference with all their members for this morning, in which they are expected to lay out the particulars of a plan to tie a payroll tax cut to an extension of unemployment insurance, and pay for it all.

If it’s viable, that will help out some House Republicans who seem to be in a tough spot: wanting to vote for a payroll tax cut in theory, but hedging their bets as the party works out whether they can live with the pay-for proposal without contradicting themselves.

Nevada Rep. Joe Heck seems to be an example.

“He’s voted for them in the past,” said Heck spokesman Darren Littell, explaining that Heck was “open to voting for it again” but would need to see the pay-for plan first.