Update on Payroll Tax-Omnibus-Continuing Resolution

Posted on December 15, 2011. Filed under: Uncategorized | Tags: , , , , , , , |

By Virginia Ainslie
December 14, 2011

Senate Minority Leader Mitch McConnell has denied Senator Reid’s request to take up the House version of the payroll tax extension/UI/Doc fix bill, insisting that “Congress’s first priority should be avoiding a government shutdown”. Reid offered to fast track a one week Continual Resolution (CR). McConnell said no. That exchange could make sense only in the current Senate environment.

But appropriation bills must be initiated by the House, and House Republican leaders appear to be coming to terms with the need for a short CR to keep fed agencies not covered by the recent minibus open past midnight Friday, December 16. Length of this CR would depend on the status of negotiations on the payroll tax bill.

However, there is growing support in the House Republican caucus for passing a month-long CR, then daring the Senate to pass its own version of a payroll tax cut extension/UI/Doc fix bill. This would delay tax extenders, but most could be done retroactively, although the doc fix gets really complex if delayed past January 1. The Senate would be under great pressure to take up that CR, but would be hard pressed to get any payroll tax extension package passed in coming months.

If the Democrats move their own such legislation in the Senate, it is likely to use as offsets the peace dividend from the end of major military ops in Afghanistan and Iraq, plus another small surtax on millionaires (this time with an exemption for small businesses) as offsets for the payroll tax extension/UI/doc fix. That approach, which fails to reimburse the Social Security Trust Fund as the House bill does, probably won’t get 60 votes in the Senate. But neither will a Republican payroll tax/UI/doc fix bill.

Senator Reid and Representative Pelosi have leverage on the omnibus. Representative Boehner needs House Democrats to get this bill passed in the House because at least 100 Republicans are expected to vote against it. Advantage goes to the Democrats because Republicans are divided. That advantage is lost the minute the omnibus is passed by the House. This is one reason the omnibus conference agreement is being “slow walked” by Democrats, with the blessing – some say at the instigation of – the White House.

McConnell and Boehner have leverage on the House payroll tax extension bill because Senate Democrats are divided on Keystone XL. Advantage goes to the Republicans.

Meanwhile, appropriators, who sweat blood to achieve near agreement on a nine-bill omnibus, are holding their breath hoping their hard work results in enacted legislation. The EPA FY 2012 appropriation is said to provide greater funding than a CR, but we don’t know yet how these funds would be distributed among environmental programs.

There are ugly environmental and other riders in both the omnibus and House payroll tax extension package. Final rider language may depend on which bill moves first. It is possible that a compromise payroll tax package could get added to the omnibus if a deal is within reach this week or next. That fate of such a mega-bill could rest on which riders are included.

There also is a possibility for a short government shutdown if McConnell continues to insist that he will not allow a short-term CR to be considered in the Senate. I don’t know if his Senate Republican colleagues will go along with that stance in the face of an imminent shut down, however.

Behold the year-end madness.

Turner GPA is a leading D.C.-based national lobbying and government affairs firm dedicated to delivering cutting edge policy advocacy for the manufacturing, defense, aerospace, health and energy industries. Members of our professional policy team can be reached at (202) 466-2511. We are also on the Web at www.turnergpa.com.

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