Conferees continue to show little payroll tax progress

If you thought the ticking clock would force some public progress out of the conference committee dealing with the payroll tax cut — think again.

With the tax break expiring at month’s end, the conference committee charged with crafting a year-long extension on Tuesday slogged through yet another meeting with little noticeable progress.

The 20 lawmakers, in their first meeting to focus solely on how to pay for their proposals, found themselves in stark disagreement over a pay freeze for federal workers and Medicare and other healthcare changes.

“Our time is short. We do need to find pay-fors that can pass both bodies,” said Rep. Dave Camp (R-Mich.), the chairman of the conference committee. “I would ask all the conferees to remain flexible because we don’t have a lot of time left.”

The meeting came as all sides agree that time is running short when it comes to extending the payroll tax cut, as well as emergency unemployment benefits and the Medicare reimbursement rate for doctors.

And with conferees seemingly deadlocked for the third meeting in less than a week, Camp said that the panel might have to talk about another short-term extension of the payroll tax cut, or broaden their discussion of possible offsets.

The meeting further underscored the idea that lawmakers will need to make progress behind closed doors to hash out a year-long deal.

Sen. Max Baucus (D-Mont.), the vice chairman of the conference committee, also said Tuesday that Democrats would soon unveil a broader proposal on unemployment benefits.

“We’ll find a solution that has quite significant bipartisan agreement,” Baucus, who also called another short-term extension very unlikely, told reporters after the meeting. “Of that, I’m sure.”

Congressional Democrats have long sensed that they have the political advantage on the payroll tax issue, especially after House Republicans caved and agreed to a two-month extension in December.

And with time now running short, leaders from both parties and both chambers are increasingly inserting themselves into the debate over the tax break, which helps an estimated 160 million Americans.

Senate Majority Leader Harry Reid (D-Nev.) has said in recent days that Democrats in his chamber were working on a “back-up plan,” an idea that leading Republicans have called unhelpful.

House Speaker John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va.) have pushed back in recent days, saying that Senate Democrats don’t appear willing to negotiate with the GOP.

On Tuesday, Republicans on the panel said that the three proposals discussed in Tuesday’s meeting — to extend a federal pay freeze, limit Medicare benefits for higher-income beneficiaries and to prevent subsidy overpayments — had all been supported by President Obama and Democrats.

But on the flip side, GOP lawmakers said, the surtax on millionaires — a pay-for favored by Democrats — had been consistently shot down in the Senate. In all, a package dealing with the payroll tax, unemployment benefits and the Medicare reimbursement rate could cost around $160 billion.

“It seems like today we’re just hearing no for the sake of hearing no,” said Rep. Kevin Brady of Texas, a GOP conferee.

For their part, Democrats said their party had put those proposals forward as part of a broad deficit-reduction package, and not in the more narrow discussion over the payroll tax cut, unemployment benefits and the so-called Medicare “doc fix.”

During their Tuesday discussion, Republicans and Democrats also continued to spar over what should even be on the table.

Camp, who also heads the House Ways and Means Committee, continued to argue that provisions in proposals that were not either in the House or Senate bills passed last year were not in the scope of the conference.

But Democrats suggested that the GOP would have to broaden the scope if they truly wanted Democratic input.

“I think if we’re going to succeed, we need to find a way to have a lot of back-and-forth,” said Rep. Sandy Levin (D-Mich.), the ranking member at House Ways and Means.

Republicans also noted Tuesday that extending a pay freeze on federal workers and members of Congress, one of their preferred pay-fors, passed the House last week with significant Democratic support.

To bolster their argument, the GOP lawmakers again cited a Congressional Budget Office analysis that said that federal workers, on average, get 16 percent more in compensation than their private-sector counterparts.

But Democrats say that studies have also found that high-earning federal employees actually make much less than those doing similar work outside of government.

They added that Democrats could agree to extend a pay freeze just on members of Congress.

Democrats also dismissed Republican attempts to compare their preference for a surtax on millionaires to the proposal to reduce Medicare subsidies for seniors on higher incomes.

The two sides brought back an argument about overpayments in exchange subsidies, an idea that was in both the House payroll tax cut bill and the healthcare overhaul.

Democrats on Tuesday said that proposal was akin to a tax increase, while Republicans said it was merely a case of taxpayers giving back money to which they weren’t entitled.

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