Senate defeats rival payroll tax cut extension bills

Senate Republicans  on Thursday night voted to defeat the latest installment of President Obama's jobs plan-- a bill to extend the payroll tax cut.

The bill, officially called the Middle Class Tax Cut Act, S. 1917, was shot down 51-49, and would have cut the employee and employer payroll tax to 3.1 percent, half of the 6.2 percent tax they would normally face. 

Throughout the week, Senate Majority Leader Harry Reid (D-Nev.) kept reminding Republicans that they usually support tax cuts of any kind and even quoted his counterpart, Senate Minority Leader Mitch McConnell (R-Ky.),as having spoken out in favor of of the cut in 2009.

"In 2009, Sen. McConnell went on to say that, 'Republicans, generally speaking, from Maine to Mississippi, like tax relief,'" said Reid. "Yet Republicans already appear poised to block this legislation."

Most Republicans, however, said they supported the underlying cuts, but would reject the bill because of the included “surtax on millionaires,” which would have applied a 3.25 percent tax on modified adjusted gross income higher than $1 million, or $500,000 for a married individual filing separately. 

Similar pay-for mechanism have sunk almost every fragment of the Obama jobs bill that have hit the Senate floor so far this year. 

In response to Reid's allegations that they opposed a tax cut, Republicans hurried on Wednesday to come up with their own version of the plan which was also defeated Thursday night, but by a 20-78 margin. 

That proposal would have met Democratic demands to extend the payroll-tax cut but would have funded it by extending a two-year freeze on pay for federal workers and by reducing the federal workforce by 10 percent.

Centrist Sen. Joe Manchin (W.Va.), who was one of only three caucusing Democrats to buck their party’s leadership in opposing the Democratic version claimed on Thursday it could undermine the financial integrity of Social Security. 

“Why would we do this?” Manchin asked. “Why would we double down on a policy that didn’t work?” 

On Thursday Reid also slammed Republicans’ jobs counter-proposal  saying it would devastate middle-class workers who make their living in the public sector. 

“Under their plan ... many more middle-class families around the country would lose their jobs,” Reid said. “That includes Americans dedicated to public service, hardworking people committed to keeping our streets safe, FBI agents, drug enforcement officers, food-safety workers, highway construction workers."