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Congress's Payroll Standoff -- Who Blinks First?


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National Journal:

Less than two weeks remain – with a holiday in between – for Congress to keep alive a payroll-tax cut, unemployment insurance, and a “doc fix” patch. Here is how it could play out:

HOUSE GOP BLINKS: House Republicans see the futility of fighting President Obama the week before Christmas and agree to the Senate’s two-month payroll-tax cut extension on one condition: Senate Democrats agree to go to conference on a full, one-year payroll tax extension with spending cut offsets by Feb. 1. Senior House GOP aides would not say if this is under active consideration but would not rule it out. John Harwood of CNBC and The New York Times first reported this possibility. Probability: 50 percent.

IT ALL EXPIRES: The payroll-tax holiday expires on Jan. 1, as do jobless benefits for more than 2 million workers, while Medicare doctors see a 27 percent cut in their reimbursements. Public pressure and outrage galvanize quickly, prompting Congress to return in early January and cut a hurried deal to address all three issues. Probability: 30 percent.

MORE GIMMICKS: House Republicans and Senate Democrats fall prey to the temptation to use “savings” from the Overseas Contingency Operations (Iraq and Afghanistan war funding), built into the Congressional Budget Office baseline budget and offset the costs of a one-year payroll tax cut, jobless benefits, and blocking the Medicare reimbursement pay cut for doctors. Probability: 10 percent.

SENATE DEMOCRATS GIVE IN: House Republicans stick to their guns, stay in Washington in small numbers this week and next, hector Senate Majority Leader Harry Reid until he relents, appoints a conference committee, and enables negotiators to swiftly reach a compromise. Probability: 5 percent

HOUSE BACKS DOWN: House Republicans cave entirely and pass the Senate’s two-month payroll-tax cut extension next week. Probability: 5 percent.

It is the season of miracles, and a way through the desert might just be found, with or without wise men or wise women.snip
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