Congressional lawmakers seem to be having a tough time agreeing upon a payroll tax deal as their deadline to do so draws nearer. To encourage them to get the ball rolling, President Barack Obama has threatened to delay his own Hawaiian trip and stall Congress’ Christmas vacation until a deal is complete.
Two Payroll Tax Plans Rejected by Senate
Lawmakers have been fighting for a few weeks to determine how they will extend Social Security payroll tax cuts that are set to expire after Dec. 31. The payroll tax cuts were approved in Dec. 2010, giving workers a 2 percent discount on the payroll taxes for the 2011 tax year.
Both Republicans and Democrats agree that tax cut extensions should be pushed into next year, but neither agree on how the cuts should be extended. On Thursday, the Senate rejected dueling Democratic and Republican payroll tax plans, leaving the House to find a way to get a plan passed.
House GOP leaders have already stated that they agree with Senate Republicans’ idea to add a provision to the extension that would assure construction of an oil pipeline from Canada to Texas. They also want to reduce the current maximum of 99 weeks for unemployment benefits to 57 weeks and cut payments doctors receive for treating Medicare patients by 27 percent.
On the other hand, Democrats want to lower the currently-reduced payroll tax payment of 4.2-percent to 3.1 percent next year while trimming the payroll tax employers pay as an incentive to hire workers. Critics say the vast disagreements point to a failure to pass a plan by the deadline, which is why Obama is taking extra steps to get it done.
Disagreement on Payroll Tax Cuts May Lead to a Late Christmas
In an effort to push lawmakers to pass a tax cuts plan, Obama has announced that Congress must either agree to a deal before leaving for the holidays or push back their vacations until their jobs are complete.
He said on Thursday that he plans to delay his Hawaiian vacation and stay in Washington “as long as it takes.”
“I do not expect Congress to go home unless the payroll tax cut is extended and unless unemployment insurance is extended,” Obama said. “It would be wrong for families, but it would also be wrong for the economy as a whole.”
Lawmakers in the House have stated their plan to aim for a vote next week with a drafted plan nearly in place. Most think Congress will be able to pass extensions to both the payroll tax cut, unemployment benefits and Medicare payments by the end of the year.
