By Erik Wasson - 06/22/11 04:42 PM EDT
Senate Democrats on Wednesday formally backed putting stimulus measures such as a payroll tax deduction into the deficit-reduction package being negotiated by Vice President Biden and six members of Congress.
No formal proposal will be tabled in the session of the talks to be held Wednesday by Sens. Max Baucus (D-Mont.) or Daniel Inouye (D-Hawaii). The group is still reviewing various stimulus proposals and is not "wedded" to any one, Sen. Charles Schumer (D-N.Y.) told reporters.
Aug. 2 is the deadline when Treasury Secretary Timothy Geithner has said the U.S. will hit the debt ceiling and default on its payments. Republicans have said they will not vote for an increase in the ceiling without substantial spending cuts.
"We're recommending to the Biden deficit commission that they put jobs as part of what they're doing to help stimulate the economy, because, I repeat, cutting is only part of the game," Senate Majority Leader Harry Reid (D-Nev.) said. He said that he was instructing committee chairs to hold hearings in the coming weeks and come up with ideas by Aug. 1-- the eve of the debt ceiling deadline.
Sources said that that so far stimulus ideas have not come up in the Biden talks which have been focused first on reaching trillions of dollars in deficit reduction. One source said the Aug. 1 deadline could make sense since any stimulus ideas would come at the end of the discussions, after the Biden group has handed over the tough decisions to President Obama and House Speaker John Boehner (R-Ohio).
Asked about the proposal heading into a round of Biden talks, House Majority Leader Eric Cantor (R-Va.) was noncommittal Wednesday on the idea of a payroll tax holiday. "I am not saying I am open to it or not open to it," he said, emphasizing that he believes deficit reduction is all about creating jobs.
Schumer said extending or expanding the payroll tax reduction enacted in the December 2010 tax cut deal between the White House and Congress is high on the list. Infrastructure spending and support for clean energy are other possible Democrat demands.
He told reporters that if the stimulus cannot be included in the package by Aug. 2, Democrats want it passed simultaneously. Democrats plan to launch a yearlong "Jobs First" campaign to pressure the GOP on job creation in September, he said.
Schumer is pushing hard for the payroll tax break, either for employees, employers or both.
“It is hard to figure out why Republicans would say 'no' for three reasons: it's pro-business, it’s a tax cuts, and many of them have supported it in the past,” he said. “The administration likes this.”
He said even if the tax holiday costs $100 billion, it will be paid for by other aspects of the deficit package, Schumer said, in keeping with the goal of $4 trillion in reductions over ten years. Schumer said a poor May jobs number makes stimulus an "imperitive."
Senate Majority Whip Dick Durbin (D-Ill.) said Senate Majority Leader Harry Reid (D-Nev.) has spoken to the president and the vice president about the idea and they are open to it.
“We just made the formal proposal; we have been talking to them for a long time,” he said. “The Republicans are fixating on the deficit and it is a serious problem.”
“I think we can do it in two steps,” he said. He said that the $4 trillion in deficit reduction over 10 years that is needed likely will not be agreed to by Aug. 2.
He said having worked for six months in the Gang of Six talks, he knows how hard that is.
Asked it the remaining five members of the Gang will produce something, Durbin said they are still seeking consensus.
“I don’t want to speak for the ‘Five Guys.’ I have been urging them for weeks to come out of the deficit closet. Let’s have a little conversation with the American people about what we think,” he added.