Senate fails to pass payroll tax break extension

posted at 12:05 pm on December 2, 2011 by Jazz Shaw

The Senate rejected two different plans for extending the payroll tax holiday for another year, and it mostly went along party lines. At the bottom of it all was the usual discussion we’ve been seeing on every spending issue for some time now: whether to pay for it and how to do so if they would.

The Senate late Thursday rejected competing partisan visions for extending a temporary tax break that benefits virtually every American worker, clearing the way for more serious negotiations over how to cover the cost of the tax cut.

All but a handful of Democrats voted in favor of their party’s proposal, but in a surprising turn, more Republicans voted against the GOP plan than in favor of it. Senate Minority Leader Mitch McConnell (R-Ky.) predicted this week that a majority of his conference would vote for the party’s plan to extend the payroll tax cut.

The vote suggests that rank-and-file Republicans remain divided on the merits of keeping the tax cut, leaving their party vulnerable to criticism from Democrats that they would raise taxes on the middle class as Americans are struggling economically.

I’ve been watching this play out on the 24/7 news channels this morning, and it’s pretty much along the lines that I predicted earlier in the week. On CNN and MSNBC there are sad eyed sages, nodding their heads in somber fashion, bemoaning how sad it is that the Republicans are “willing to raise the taxes on tens of millions of hard working Americans” while protecting tax cuts for the most wealthy. On FOX they’re discussing how the current scheme is bleeding the Social Security system dry without providing any viable means to make up the shortfall.

Of course, each side has proposed some method of paying for it. The Democrats are more than happy to put a surtax on millionaires to cover the tab, but that’s not going anywhere. The GOP has offered a plan where government employees can take a pay freeze to reduce the overall government bill. Of course, the unions aren’t having anything to do with that one.

It’s an interesting position that the unions are putting the Democrats in, though. In essence, they’re being forced to die on a hill where they don’t want to agree to have a bunch of people who have jobs – and fairly comfortable government ones at that – to accept a pay freeze, while a massive number of people have no job at all. I wonder how that will play next November?

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Wouldn’t that be just more wealth redistribution?

Chip on December 2, 2011 at 12:09 PM

How many days has our government been operating without a budget again…?

Seven Percent Solution on December 2, 2011 at 12:11 PM

Did they read the bills before they voted since they seem to know what’s in it? Either way this ends up is a win for Obamao.

Kissmygrits on December 2, 2011 at 12:11 PM

I watched some report on this last night where the democrats were trying to explain why they opposed the pay freeze:

Explain that to the researcher who is trying to cure AIDS

Or the FBI agent tracking down terrorists.

Wait. You mean, all government workers are doing this?

There isn’t a single one who is redundant? Not 1? Not a single soul could be fired without risking the entire government’s ability to function. Really?

lorien1973 on December 2, 2011 at 12:13 PM

It will be be passed eventually. They’ll COMPROMISE (read GOP will cave) and get this done.

angryed on December 2, 2011 at 12:15 PM

Last I heard, the democrats controlled the Senate but it is the Republicans that blocked the bill?

trs on December 2, 2011 at 12:16 PM

Wouldn’t that be just more wealth redistribution?

Chip on December 2, 2011 at 12:09 PM

Pretty sure that was the plan from the beginning. Cut the payroll tax and then demand higher taxes on high earners later. It’s a great way to make our super-progressive tax code even more lopsided.

forest on December 2, 2011 at 12:18 PM

All but a handful of Democrats voted in favor of their party’s proposal, but in a surprising turn, more Republicans voted against the GOP plan than in favor of it.

How does this not add up to 60? Something seems dodgy about this description of the vote.

forest on December 2, 2011 at 12:20 PM

How does this not add up to 60? Something seems dodgy about this description of the vote.

forest on December 2, 2011 at 12:20 PM

It was 2 votes on 2 bills.

Vote 1: Dems/Reps voted on party lines, didn’t get 60
Vote 2: Lots of Reps joined Dems to vote against it, didn’t get 60.

angryed on December 2, 2011 at 12:23 PM

But they did pass, by 93-7, a bill that allows the DOJ to arrest people.

SouthernGent on December 2, 2011 at 12:24 PM

In essence, they’re being forced to die on a hill where they don’t want to agree to have a bunch of people who have jobs – and fairly comfortable government ones at that – to accept a pay freeze, while a massive number of people have no job at all. I wonder how that will play next November?

It will get as much airplay as Gunwalker does.
i.e. none.

orbitalair on December 2, 2011 at 12:27 PM

angryed on December 2, 2011 at 12:23 PM

Thanks. I’m not used to Republican bills going to a vote in the Senate.

forest on December 2, 2011 at 12:33 PM

Agree, if only watched the lsm, its the gop who blocked any bills, no mention of dems blocking any bills

It’s all the gops fault

cmsinaz on December 2, 2011 at 12:34 PM

Cant help but notice where the discussion on payroll tax cuts seems to be heading. Democrats are advocating for cutting employee rates to half of what it is now, and eliminating employer contibutions for a few months. They intend to pay for this by raising taxes on those making over a million. Do you think that they’d raise taxes on the employees in the future, or do what this plan seems to be doing: shifting the payments of Social Security and Medicare to those making $1M+, thus making them ultimately responsible for the retirement and medical benefits for the “less fortunate”….?
This doesn’t bode well

Cmyst82 on December 2, 2011 at 12:35 PM

These dimwits couldn’t agree on how many inches are in a foot, why should Americans expect them to pass a budget.

Time to broom the entire lot and start from scratch with people chosen randomly from the greater Hanoi-area phone book, or with Howler monkeys freshly removed from the jungle, either of which would do a better job.

Bishop on December 2, 2011 at 12:35 PM

Once again the Republicans shoot themselves, and Middle Class Americans, in the foot. The sad thing is that while Americans ‘drown’ in this Washington DC-created economic quagmire, our elected officials aren’t / can’t seem to get together to do one thing to save us….yet they will want us to save their jobs next election.

easyt65 on December 2, 2011 at 12:38 PM

Wouldn’t that be just more wealth redistribution?

Chip on December 2, 2011 at 12:09 PM

Pretty sure that was the plan from the beginning. Cut the payroll tax and then demand higher taxes on high earners later. It’s a great way to make our super-progressive Oppressive tax code even more lopsided.

forest on December 2, 2011 at 12:18 PM

Sorry, I had to fix that for accuracy.

Chip on December 2, 2011 at 1:01 PM

It will get as much airplay as Gunwalker does.
i.e. none.

orbitalair on December 2, 2011 at 12:27 PM

This is precisely why Nations that transition to Socialism have to shut down free-speech and a free-press – Marxism cannot abide the truth challenging it.

Chip on December 2, 2011 at 1:03 PM

I’m in the middle (lower middle) class, and I feel like I’m drifting along in a canoe with broken oars, a leak plugged with chewing gum, headed straight for Niagara Falls, while our elected officials take the limo to work, bicker for a few hours, then go home, having accomplished nothing but blame each other for not doing anything.

scalleywag on December 2, 2011 at 1:06 PM

Stop cutting payroll taxes. In many cases this is the only tax people pay.

darwin on December 2, 2011 at 1:14 PM

And yet, there are 9% of Americans who approve of the job congress is doing. Who are those people?

scalleywag on December 2, 2011 at 1:20 PM

I have a question that I just don’t know the answer to.

Your Social Security checks that you receive after getting 65,66,67 years old are based on the payments that you make of the years. If the Congress and Pres**ent Obama lower your contributions, does this mean you will get less in your Social Security checks in your retirement years ?

… and you say Pres**ent Obama is a friend of the poor … sure

J_Crater on December 2, 2011 at 1:28 PM

Cant help but notice where the discussion on payroll tax cuts seems to be heading. Democrats are advocating for cutting employee rates to half of what it is now, and eliminating employer contibutions for a few months. They intend to pay for this by raising taxes on those making over a million. Do you think that they’d raise taxes on the employees in the future, or do what this plan seems to be doing: shifting the payments of Social Security and Medicare to those making $1M+, thus making them ultimately responsible for the retirement and medical benefits for the “less fortunate”….?
This doesn’t bode well

Cmyst82 on December 2, 2011 at 12:35 PM

Thank you, thank you, thank you.

This is part of a larger policy shift to fund Social Security with income taxes.

http://www.economics21.org/commentary/jobs-bill-pretending-fund-social-security

Chuckles3 on December 2, 2011 at 1:29 PM

Stop cutting payroll taxes. In many cases this is the only tax people pay.

darwin on December 2, 2011 at 1:14 PM

Well, shouldn’t people have to contribute to their own retirement?

Why is it that the socialists in the national Democratic Party can’t see the danger in some voting for a living?

A danger expressed by many such as Ben Franklin:

“When the people find they can vote themselves money, that will herald the end of the republic.”

How can they possible think that their method is any different that what is failing over in Europe as we speak. er..write?

Chip on December 2, 2011 at 1:29 PM

The payroll tax that is being cut is the only thing funding SS isn’t it? And SS is barely holding on even though that was the first thing Obama threatened to withhold at the end of July. This means Obama wants to borrow to make SS payments already. Wow!

DanMan on December 2, 2011 at 1:33 PM

On FOX they’re discussing how the current scheme is bleeding the Social Security system dry without providing any viable means to make up the shortfall.

I literally bang my head on my desk every time I hear that. The current scheme is worse than “bleeding Social Security dry” – it’s taking borrowed general revenues to shove into the Social Security “Trust Funds” (or more-accurately given SocSecurity is running in the red, giving SocSecurity borrowed money so it doesn’t have to cash in even more of the bonds it holds and thus allowing interest to continue to accrue).

Only in DC does borrowing so one can borrow, and paying double interest, make sense.

Steve Eggleston on December 2, 2011 at 1:35 PM

It’s an interesting position that the unions are putting the Democrats in, though. In essence, they’re being forced to die on a hill where they don’t want to agree to have a bunch of people who have jobs – and fairly comfortable government ones at that – to accept a pay freeze, while a massive number of people have no job at all. I wonder how that will play next November?

And thus we know why federal union employees don’t have the privilege to collectively bargain their wages – the government is more than willing to give them everything they want.

Steve Eggleston on December 2, 2011 at 1:38 PM

How many days has our government been operating without a budget again…?

Seven Percent Solution on December 2, 2011 at 12:11 PM

Since Octiber 1, 2009, the day after the FY2009 budget resolution expired.

Steve Eggleston on December 2, 2011 at 1:39 PM

This stupid idea is the same as me deciding to stop contributing $2K a year to my IRA and go buy a new $2K TV instead to stimulate the economy. All I’ve done is borrow $2K from myself in 30 years and spent it today. Only an economically illiterate Democrat (but there I go repeating myself) would call that a tax cut.

angryed on December 2, 2011 at 1:51 PM

The payroll tax holiday is a bad idea. Social Security collects a surplus, and will for the next decade

What is not paid out as checks goes into a big fat phony Treasury note, which is put into a drawer in DC, in a ceremony attending by a handful of people, no cameras please, while the surplus cash is spent by Congress. Those notes have been accruing interest on paper, interest which will never be paid, but is used to calculate the bottom line of US finances. Hey the fund has grown by billions

What should be done is to collect the payroll tax as usual, but allow a line on the tax forms to calculate a refund of surplus payroll taxes paid that year, prorated

Next, we should stop the phoney interest payments on the surplus. It ain’t gonna happen, it is all vapor, but it is used to hide the problem.

Why are we paying interest on our own debt? Stinking fraud

By the end of the year, we know how much payroll tax was collected, We also know how much of the payroll tax was spent. Set up a table in the tax book, to determine the pro rata share of the surplus to be returned to the taxpayer as a credit

Social Security will be paying recipients out of payroll tax money, but the surplus will be refunded

Of course Congress has already spent the surplus on jet rides and booze tabs, and the CBO, GAO etc will have to go cold turkey

One year without fake interest added to the SSA surplus and the US bottom line will finally be attended to. The Europeans waited too long by hiding the books. We have to get real

entagor on December 2, 2011 at 2:17 PM

The payroll tax holiday is a bad idea. Social Security collects a surplus, and will for the next decade

What is not paid out as checks goes into a big fat phony Treasury note, which is put into a drawer in DC, in a ceremony attending by a handful of people, no cameras please, while the surplus cash is spent by Congress. Those notes have been accruing interest on paper, interest which will never be paid, but is used to calculate the bottom line of US finances. Hey the fund has grown by billions

What should be done is to collect the payroll tax as usual, but allow a line on the tax forms to calculate a refund of surplus payroll taxes paid that year, prorated

Next, we should stop the phony interest payments on the surplus. It ain’t gonna happen, it is all vapor, but it is used to hide the problem.

Why are we paying interest on our own debt?????

By the end of the year, we know how much payroll tax was collected, We also know how much of the payroll tax was spent. Set up a table in the tax book, to determine the pro rata share of the surplus to be returned to the taxpayer

Social Security will be paying recipients out of payroll tax money, but the surplus will be refunded

Of course Congress has already spent the surplus on jet rides and booze tabs, and the CBO, GAO etc will have to go cold turkey

One year without fake interest added to the SSA surplus and the US bottom line will finally be attended to. The Europeans waited too long by hiding the books. We have to get real

entagor on December 2, 2011 at 2:20 PM

sorry my post went in two times

entagor on December 2, 2011 at 2:21 PM

Both parties need to decide what Social Security really is. If it is a welfare program than the FICA tax is just another tax. If it is an insurance program than the FICA tax should only be reduced if Social Security no longer needs that much money. What to do with the tax is really dependent on what the tax supports.

Dawnsblood on December 2, 2011 at 2:24 PM

sorry my post went in two times

entagor on December 2, 2011 at 2:21 PM

Hey, we all do that.

Hey, we all do that.

:-)

Chip on December 2, 2011 at 2:31 PM

With Social Security in financial trouble…trouble admitted by both Democrats and Republicans…it never made sense to compromise its only real source of revenue.

Our nation’s fiscal problems cannot be solved by political tricks and hand-waving.

landlines on December 2, 2011 at 3:02 PM

Now would be a great time for yet another group of Poli Sci retards, at yet another college, to do a study, “proving” more Fox viewers are stupid, because Fox is the only one properly identifying these moneys as coming straight out of the social security system.

Or maybe it’s time to just be honest, and to scrap the whole SS system, and treat it as the welfare program it is, funded by an already existing progressive tax system. It’s obvious that the whole 15.3% of the first $100,000 or so regressive taxation scheme is crumbling.

MNHawk on December 2, 2011 at 3:08 PM

This is part of a larger policy shift to fund Social Security with income taxes.

http://www.economics21.org/commentary/jobs-bill-pretending-fund-social-security

Chuckles3 on December 2, 2011 at 1:29 PM

I thought we were doing this already, since Social Security is part of the general fund…

dominigan on December 2, 2011 at 3:32 PM

One year without fake interest added to the SSA surplus and the US bottom line will finally be attended to. The Europeans waited too long by hiding the books. We have to get real

entagor on December 2, 2011 at 2:20 PM

I agree with much of what you write, but this part is incorrect:

Social Security collects a surplus, and will for the next decade

Actually, Soc Sec is in the red now — it’s only the interest payments that you (correctly) describe as phony that create its apparent surplus. Soc Sec is spending $151 billion more than it is collecting in tax revenue this year.

Chuckles3 on December 2, 2011 at 7:22 PM