"In order to pay for the $6 billion cost of extending the 3.4 percent interest rate for one year, the Reid bill attempts to do what nearly every bill proposed by Senate Democrats this session has done: it permanently raises taxes on job creators in order to pay for temporary spending," he added.

Kyl also said the bill also "takes more money from private sector and gives it to the government, at the very time when we want the private sector to have enough to create new jobs." Even worse, he said, is that Democrats are proposing to use payroll taxes not to fund Medicare and Social Security, as they are normally used, but to pay for this unrelated program.

The Senate is debating a bill from Senate Majority Leader Harry ReidHarry Mason ReidMcConnell not yet ready to change rules for Trump nominees The Hill's Morning Report — Sponsored by CVS Health — Trump’s love-hate relationship with the Senate Trump to press GOP on changing Senate rules MORE (D-Nev.) that would lift an exemption under the current tax code that allows some high-income earners to exempt some of their income from S-corporations from payroll taxes. Democrats say the bill is needed to prevent people with S-corp income from paying themselves a small salary to dodge taxes, and then taking the more income as business profits.

But Kyl said the IRS already has a program in place to prevent this practice, and said it has been using this program successfully for decades.

"IRS is well aware of this potential, and has developed and implemented tools to go after firms and individuals who do not pay appropriate payroll taxes through what is called the 'reasonable compensation' test," he said.

Republicans are expected to vote against a motion to proceed to this bill on Tuesday, after which it is unclear how the Senate will try to move ahead with a student loan bill.