Payroll tax cut talks adrift on Capitol Hill

WASHINGTON (AP) -- The prospects for an extension of President Barack Obama's signature payroll tax cut, once considered a slam dunk on Capitol Hill, now seem far less certain as House-Senate talks have deadlocked over finding ways to pay for it.

In a contentious negotiating session Tuesday, Democrats came out against House GOP proposals to partially pay for the two percentage point payroll tax holiday through freezing federal workers' pay and requiring more affluent seniors to pay higher Medicare premiums.

Also at stake is a renewal of jobless benefits for people who have been out of work for more than six months and repairing an outdated government formula to prevent doctors from having to bear a huge cut in their Medicare payments.

After four public sessions, the House-Senate talks have failed to yield a single significant breakthrough, leading party leaders in both the GOP-dominated House and Democratic majority Senate to lob charges that their rivals are slow-walking the negotiations. "We have significant concerns about whether Senate Democrats are really willing to step up and work with House Republicans on the payroll tax cut bill,'' House Speaker John Boehner, R-Ohio, told reporters Tuesday. "Senate Democrats have never come to the table with a plan to offset this new spending that they're all for.''

For his part, Senate Majority Leader Harry Reid, D-Nev., has threatened to bring up a whole new measure if the House-Senate negotiations remain stalled. Michigan Rep. Dave Camp, the top GOP negotiator, has turned the focus to the most contentious issue: finding ways to foot the bill for the $150-160 billion cost of the measure. But Camp, a top Boehner lieutenant, has been slow to invite Democrats to discuss their ideas to pay for the legislation, insisting, at least until Tuesday, on obeying arcane rules that limit the scope of the debate to the GOP ideas that have passed the House on a near-party line vote last year. That has led to meandering discussions on topics like blocking EPA rules on emissions from industrial boilers and allowing states to impose drug tests on people receiving jobless benefits.

After Tuesday's talks went nowhere, Camp finally invited Democrats to submit proposals not related to those contained in the House GOP measure and said that negotiators might be forced to scale it back.

Tuesday's almost three-hour discussion, like three previous ones, involved speechifying instead of real negotiations. Lawmakers lobbed charges back and forth over whether it was fair for three million federal civilian workers to have their pay frozen for a third consecutive year to help pay for the tax cut and whether seniors with income exceeding $80,000 a year should pay more for their Medicare coverage. "It seems to be the flavor of the day to go after federal workers,'' said Rep. Chris Van Hollen, D-Md.

Leader Democratic negotiator Sen. Max Baucus of Montana added that, "We should not be penalizing (Medicare) beneficiaries while we're increasing doctor fees.'' But Sen. Jon Kyl, R-Ariz., a veteran of the failed budget "supercommittee'' and deficit talks last year involving Vice President Joe Biden, said the ideas had been all but agreed to in negotiations last year. "We're hearing `no' for the sake of hearing 'no,''' said Rep. Kevin Brady, R-Texas.

Negotiators also split over whether people who receive health insurance subsidies under the Obama's new health care law should have to repay a greater portion of overpayments they may receive.

It's a complicated topic, but Democrats have supported the idea in previous legislation. Taken together, the three provisions discussed Tuesday would raise $70 billion over a decade to finance the jobless benefits, payroll tax cut and Medicare payments to doctors. The proposals amply demonstrated the tradeoffs involved in cutting spending elsewhere in the budget to defray the cost of cutting taxes. Sen. Ben Cardin, D-Md., pointed out that the proposed pay freeze for federal workers would end up costing them far more than they would get from the two percentage point payroll tax cut, which would deliver just $20 a week to a typical worker earning a $50,000 salary.

Similarly, a proposal to raise $31 billion over a decade by requiring wealthier seniors to pay higher Medicare premiums would eventually require 25 percent of beneficiaries to pay higher "means-tested'' premiums instead of just 5 percent now. Democrats came out in opposition to each idea, saying it would be unfair to make spending cuts affecting the middle class to pay for the payroll tax measure. But Republicans shot back that a so-called millionaires' surcharge pushed by Democrats went nowhere in the Senate and that the cuts have to come from somewhere.

As for the partisan pot-shots from top leaders Reid and Boehner, Camp said: "I don't think the comments from either side of leadership, from either body, are particularly helpful.''