By Alexander Bolton - 11/23/11 10:15 AM EST
After failing to reach a deal to reduce the deficit, the Senate will move next month to take up legislation that could add more than $400 billion to the deficit.
All of the proposals, such as the extension of the payroll tax cut and unemployment insurance, are popular but come with no agreement on how to pay for them.
Senate Democrats will go on offense next week by forcing Republicans to vote on extending and expanding the payroll tax cut, which accounts for $240 billion of the tab, according to Democratic and Republican aides. Lawmakers will take up the legislation after completing work on the Defense authorization bill.
It is the opening maneuver in what will be a busy month that will likely keep lawmakers in Washington up until Christmas.
Democrats are contemplating a separate vote on extending unemployment benefits, which they do not plan to offset. This would put Republicans in the tough position of blocking popular benefits at a time when the unemployment rate is 9 percent.
Unlike with the deficit-reduction supercommittee, failing to complete the December agenda will have immediate consequences. Families would see their tax bill increase by an average of $1,000, laid-off workers would lose unemployment benefits, doctors would see steep cuts in Medicare payments and corporations would see billions of dollars in tax breaks vanish.
But enacting what many lawmakers consider “must-pass” legislation will not come cheap, either.
Extending unemployment benefits for one year will cost $44 billion spread over two years.
Patching the Alternative Minimum Tax to keep middle-class families from its snare will cost roughly $70 billion for one year.
Saving doctors from scheduled cuts in Medicare payments for one year will cost $22 billion.
Extending expiring business tax provisions, including the research and development tax credit, will cost between $30 billion and $40 billion.
Payroll tax legislation paid for with a tax increase on income over $1 million is expected to fail by a party-line vote, say Democratic and Republican aides. Democrats anticipate Republicans will block a stand-alone bill to extend unemployment benefits.
Senate Republican Leader Mitch McConnell (R-Ky.) is keeping his strategy secret. A senior GOP aide said Republicans have yet to decide whether to support unpaid-for extensions of the payroll tax cut and unemployment benefits.
“Republicans would need to review the proposal in order to be able to say what their position is,” the aide said. “Democrats are floating ideas, and we haven’t seen anything specifically.”
Democratic sources say Reid may roll the payroll tax measure, unemployment benefits, the doctors’ fix, the tax extenders and the AMT patch into a single bill.
“There’s going to be a pitched battle on that and then a pitched battle on the [continuing resolution] so it’s going to be rough sledding,” said a Democratic aide, making reference to the stopgap spending measure to fund government past Dec. 16.
President Obama is already using the bully pulpit to pressure Republicans on the payroll tax cut.
After enduring criticism from the GOP and some Democrats that he should have been more involved in the supercommittee talks, Obama returned to the road Monday to urge Congress to pass the payroll tax credit, part of his jobs agenda, as soon as possible.
“Next week, they’ll get a simple vote,” Obama told a cheering crowd in Manchester, N.H. “No: Your taxes go up. Yes: You get a tax cut. Which way do you think Congress should vote?”
He also said Republicans would be violating oaths to not raise taxes if they did not support an extension of the lower payroll tax. Obama and Democrats have criticized the GOP for being unwilling to bend from the no-new-taxes pledge organized by anti-tax activist Grover Norquist and Americans for Tax Reform.
Democratic aides expect a tough battle on the continuing resolution after 101 House Republicans voted last week against an appropriations conference report that included a monthlong stopgap.
A GOP leadership aide said Republicans defected en masse from the bill because of a provision to increase the Federal Housing Administration’s borrowing limit, not because of stopgap funding.
“The bill raised the borrowing limit on FHA loans so it was on par with Fannie Mae and Freddie Mac. Conservatives argue that we’re already bailing out [government sponsored enterprises] at a record rate,” said the aide.
Congressional leaders also hope to take up Federal Aviation Administration and surface transportation reauthorization bills in December, when extensions of both expire.
The highway authorization costs $112 billion, of which $100 billion is offset. Senate Finance Committee Chairman Max Baucus (D-Mont.) is tasked with finding a pay-for to cover the remaining $12 billion and GOP aides do not expect the bill to reach the floor before then.