Senate Stalls on House-Passed Payroll Tax Bill

If today's morning action on the Senate floor is any indication of where things are headed on the payroll tax cut, now tangled with the spending bill,  a deal won't happen anytime soon.

In a testy exchange, Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., traded  jabs this morning on the Senate floor as they argued over the way forward.

But their 20 minutes of heated conversation boils down to this:  there will not be a Senate vote on the House-passed payroll bill and there is no way forward at this time.

The deadlines are very real: the government runs out of money on Friday. And the payroll tax cut extension expires on December 31.

Calling it a "dead duck," Sen. Reid this morning asked to move towards a vote on the House-passed Republican payroll tax extenders bill, knowing that it will fail in the Senate.

"We knew Monday that the bill wouldn't pass the Senate. We also knew yesterday that this bill wouldn't pass the Senate and we still know that. It won't pass the Senate," Reid said. "So let's get this vote over with. Then we can begin seriously serious negotiations on how to prevent a thousand dollars tax hike on American families."

Reid's strategy has been to push a vote on the payroll tax plan first, by tying it to the spending bill that needs to be passed before the federal government runs out of money this Friday. This would prevent the House of Representatives from passing their bills and then leaving town for the holidays without a proper deal on the payroll tax cut issue, forcing the Senate to stomach whatever the House has sent them to pass.

Reid today proposed passing a short continuing resolution (CR) to keep the government open for another week or so until they reach a compromise on the payroll tax issue, basically keeping all legislators in both houses in town until both issues are settled.  Solve the payroll tax issue first then solve the spending bill issue.

"We passed short-term CR's many times before and we should do it again if that's what it takes to prevent a tax on the middle class," Reid said, "Republicans should give Congress a few more days to finish its job rather than rushing home for a vacation."

But Senate Minority Leader McConnell objected to voting on the House Republicans bill, arguing that Congress should vote on the most pressing issue with the nearest deadline first, the appropriations bill.

"Let's deal first with the deadline that happens this Friday, two days from now," McConnell responded on the Senate floor, "fund the government through the rest of the fiscal year, and then turn immediately to the payroll tax extension that expires later in January."

Republicans have been arguing that there is an agreement on the spending bill, attempting to pull a curtain back to unveil Reid's strategy to tie the two bills together as a bargaining chip for more leverage in the payroll tax debate.

"Representative Jim Moran, Democrat of Virginia, one of the top members on the House Appropriations Committee, said this yesterday  'our bill is done. it should go to the president immediately. We're not holding it up,'" McConnell said quoting a Democrat to make his case, "We can pass that and do first things first."   

Reid contends that the appropriations bill is not finished, with at least six issues left to settle and that the holdup has nothing to do with political strategy for the payroll tax issue.

"I don't care what Jim Moran says or Mitch McConnell says. The bill is not completed." Reid then declared that McConnell is living "in a world of nonreality," and that "everyone can see very clearly that my friends on the other side of the aisle obviously want to have the government shut down."

So what's the way forward? At this time it is not clear. Both sides say they are working on the next step.  But negotiators from the House and Senate's hands are tied until the House-passed plan is killed in the Senate or another plan is proposed.

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