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Capitol Hill Update 
 

Super Committee Fails to Agree on Deficit Plan; Payroll Tax Cut Extension Now Confronts Congress 
12/2/2011   
 
 

“If at first you don’t succeed, try, try again.”

On November 21, the co-chairs of the Joint Select Committee on Deficit Reduction, Representative Jeb Hensarling (R-TX) and Senator Patty Murray (D-WA), released a statement that the so-called “Super Committee” would not reach an agreement to stem the escalating federal debt by its November 23 deadline.

Officially known as the “Joint Select Committee on Deficit Reduction,” the panel was created by the Budget Control Act of 2011 and was charged with presenting legislation to reduce the budget deficit by at least $1.5 trillion over 10 years. This failure sets in motion automatic across-the-board cuts sufficient to reduce the deficit by a total of $1.2 trillion, starting in 2013 (divided equally between defense and non-defense discretionary spending) over the next 10 years, starting in January 2013.

Now the most high-profile workplace issue in Congress before the end of the year may be how to extend last year’s 2 percent cut in the payroll tax.  While there is strong bipartisian support for extending the tax cut, paying for the payroll tax cut will be the biggest challenge.

Senator Bob Casey (D-PA) has introduced S. 1917, which would finance the tax cut with a 3.25 percent tax on the modified adjusted gross income of taxpayers earning $1,000,000 or more.  Republicans have offered an alternative bill, S. 1931,  introduced by Senator Dean Heller (R-NV). It would pay for the tax cut by extending the current pay freeze for federal workers and reducing the federal civilian work force by 20 percent through attrition.

On December 1, the Senate blocked both the Democratic and Republican versions of the payroll tax, rejecting a procedural motion to proceed (requiring 60 votes) to the Democratic proposal, S.1917 by a vote 51-49, and the Republican alternative, S1931, by 20-78.  Action on the payroll tax is expected to continue as Congress tries to figure out a way to pay for the extension.

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