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Congress Wrestles With Payroll Tax Holiday Funding

By | December 14, 2011 - 7:50 pm

Photo by Josh Edge, APRN - Anchorage: Senator Lisa Murkowski

Democrats and Republicans are wrestling over how to pay for continuing the payroll tax holiday that’s been in affect this year.  Tuesday night, the Republican-led U.S. House led passed their version of a bill that carries the tax cut over into next year, indicating that both sides of the aisle want to keep it on the books.  Democrats have been pushing to extend the tax break, saying it helps middle class Americans.  But there’s no agreement on the way to do it.

Republicans loaded their bill with add-ons that some Democrats oppose.  And Democrats are balking at the way Republicans would pay for the tax cut.

Alaska Congressman Don Young joined most of his Republican colleagues in voting for the bill which passed 234 to 193.  All but 10 Democrats voted against it.  They don’t like that it would be paid for by increasing Medicare premiums, shortening the amount of time America’s jobless could claim unemployment insurance, and continuing a freeze on federal workers’ pay.

Those are deal-breakers for Democratic Senator Mark Begich.  He’s long been a supporter of continuing the payroll tax cut, which affects 400,000 Alaskans.

“On average when you look at it, a family under $50,000 in income, not putting that money in the black hole of the federal government I think is a good thing.  So I think there’s a lot of opportunity on this one, it’s just tweaking through the pay fors,” Begich said.

Democrats have proposed paying for the payroll tax break by raising taxes on millionaires, but on Wednesday  leadership admitted they might have to drop that plan.

Another sticking point is that Republicans inserted in their bill language that would fast-track the proposed Keystone X-L oil pipeline extension from Canada down to the Lower 48.  Many Democrats don’t like that, but Senator Begich is supportive of moving the project forward and his office says that’s not a problem.

The hang-up over how to pay for the payroll tax cut is clogging up the rest of what Congress has to accomplish before it leaves for the winter holiday.  They have to pass a massive spending bill or the government will shut down this weekend.  Leaders of both parties say they’re close to agreement on the 1 trillion dollar spending bill, but they’re waiting to get the payroll tax cut plan hammered out first.

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