Federal employees got a timely email yesterday, and no, it wasn’t about the upcoming holidays. It was a warning of a looming government shutdown that could happen shortly due to an inability of Congress to pass another spending bill. At issue? The Senate says it will not pass the budget until a bill to extend the payroll tax holiday is approved. The House, meanwhile, says it already passed one, and it’s not their fault if the Democrats don’t like it.
The spending bill itself has essentially been agreed to by both sides of the aisle. But if it is passed, it allows the GOP to leave for an end of the year break, ending the payroll tax holiday and raising taxes on 160 million people. And considering how anxious many in both parties are to just call the 2011 session over and go home, the possibility of Congress just taking flight once the spending bill is final is very real.
But the White House is asking for more time to go through all of the details of the spending bill, especially the myriad of policy riders attached to it, and requested a continuing resolution to avoid a shutdown on Friday at midnight. Another CR would allow the spending bill to pass next week, hopefully in conjunction with a new, agreed on, payroll tax extension, the administration hopes.
And if the payroll tax holiday does continue, it looks like once more it will be due to Democrats giving into major Republican demands, rather than a compromise from both sides. Already word of a plan to drop the “millionaire surtax” requirement for paying for the extension, a proposed 2 percent increase in taxes for those who made more than $1 million in income a year, is in the works, with Democrats looking ready to use freezing federal pay and other middle income cuts to pay instead.
Would Republicans still block the payroll tax extension, even after getting one of the biggest concessions out there? Not if they are smart. The latest polling shows that nearly 60 percent of Americans want the payroll tax cut extended. There’s not nearly enough millionaires being protected to make up for those lost votes in 2012.
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