CQ TODAY ONLINE NEWS
Dec. 14, 2011 – 11:20 p.m.
Politics Dominates Year-End Debate
By Kerry Young, Alan K. Ota and Paul M. Krawzak, CQ Staff Writers
The end does not appear to be near. House and Senate leaders continued to jockey Wednesday over how to resolve the two big outstanding issues for the year: a "megabus" spending bill to finance most of the government and renewal of the Social Security payroll tax cut that expires Dec. 31.
In a day that consisted mostly of partisan jibes and little legislative movement, two events stood out. In one, which took on a partisan cast, House Speaker John A. Boehner, R-Ohio, signaled that Republicans might try to end-run the Democrats and force a vote on the appropriations megabus by producing a new bill that contains the contents of an unfiled conference agreement on the measure (HR 2055).
In the other, which suggested at least the possibility of negotiations toward agreements, three of the top congressional leaders — Senate Majority Leader Harry Reid, D-Nev., Senate Minority Leader Mitch McConnell, R-Ky., and Boehner — met Wednesday evening.
They said essentially nothing when leaving the meeting, and their aides also declined to characterize the conversations, which might signal that they were talking about the outlines of a compromise and did not want to upset the sensitive talks by speaking publicly.
"We're working on some stuff," Reid said as he was leaving the Senate Wednesday. Asked whether he was making progress on disputes with the GOP, he said, "We'll know later."
Contested Linkage
Reid and congressional Democrats, with the encouragement of the White House, have linked completion of overdue fiscal 2012 appropriations to passage of the payroll tax cut extension.
Republicans have objected that a House-Senate conference committee has worked out the details of the spending compromise and that it is ready to be cleared and sent to President Obama. They point out that the latest stopgap appropriations law (PL 112-55) will run out Friday, and say they oppose future short-term spending bills to prevent a government shutdown.
The House, with few Democratic votes, has passed a version of the payroll tax extension (HR 3630), and Reid insists Senate Democrats will reject it. That bill is awaiting initial Senate floor action.
In addition, the House might try to send the new appropriations bill to the Senate. It was possible that House leaders would file that legislation Wednesday night in time to permit a floor vote on Friday.
That would leave both the appropriations and payroll tax measures in the Senate's hands, and it would be up to Reid to decide how to proceed.
A Democratic senator said Reid's plans might be known by Thursday afternoon. The senator said Reid and his team were hoping to get votes on the payroll tax cut and the spending bill on Friday.
In his last floor statement of the day Wednesday, Reid signaled that he might take up the House payroll tax bill, "or some version thereof," on Thursday.
Reid is also considering the fallback step of passing a very short-term continuing resolution. "The CR would last for one or two days just to get everything finished," the senator said.
Senate Minority Whip Jon Kyl, R-Ariz., said Republicans are cool to the idea. "We do not want to do a bunch of short-term CRs. I can tell you that," Kyl said. "I just hope it can all be resolved a few days before Christmas, rather than hanging out until next year, or coming back the week after Christmas."
Reid could send a short-term continuing resolution to the House by putting it into the shell of a House-passed appropriations bill, such as the fiscal 2012 Energy-Water Development measure (HR 2354), which is still pending before the Senate.
In late September, Reid used the shell of the fiscal 2012 Homeland Security appropriations bill to keep the government operating through Oct. 4 (PL 112-36).
Threat of a Shutdown
The big worry on both sides of the aisle is that appropriations might lapse, leading to a shutdown of government operations that do not yet have money for the full fiscal year that began Oct. 1.
Executive departments and agencies began notifying federal workers on Wednesday that a shutdown would occur if no agreement were reached to extend spending authority this week.
Office of Management and Budget spokesman Kenneth Baer said agencies "are sending emails to their employees to alert them to this possibility and how it would affect them."
In an email to General Services Administration employees sent about 5 p.m. Wednesday, GSA Administrator Martha Johnson said that "prudent management requires that we plan for an orderly shutdown should Congress fail to complete its work or to pass another short-term continuing resolution that would give it more time to take up these important matters. "
Johnson said if a shutdown looks imminent, the agency would notify employees informally on Friday and formally no later than Dec. 19 whether they would be furloughed or "excepted" from furlough during a shutdown.
If no appropriations agreement were reached, a partial shutdown would be expected to begin Dec. 17. An exception to that would be if OMB determined that a spending bill were likely to be enacted that day, in which case a shutdown could be delayed.
And if Boehner does pursue a strategy of trying to move the megabus conference agreement as a freestanding bill, there is no guarantee of easy success, even in the House.
Boehner and his allies characterized the approach as trying to give lawmakers a chance to vote on a bill that presumably has bipartisan support, while also extending a hand to Senate Democrats.
"Our work is done," said Rep. Mike Simpson, R-Idaho, an Appropriations subcommittee chairman and Boehner ally. "We don't want to shut down the government. If the government shuts down, it will be because of President Obama and Harry Reid."
But it is uncertain whether House Democrats would vote for the measure because it would breach the political connection with the payroll tax bill. And without Democratic support, Boehner and his leadership team might not be able to find 218 Republicans willing to vote for the measure.
Senior House GOP sources said they expected to proceed with their game plan to "keep options open," without necessarily committing themselves to a vote on the free-standing bill.
Payroll Tax Cut in the Balance
All the maneuvering over appropriations has left the fate of the payroll tax cut measure uncertain.
A senior Democratic aide confirmed that the three congressional leaders discussed payroll tax and unfinished appropriations at their Wednesday meeting.
The aide said Democrats were considering dropping a surtax on individual income above $1 million as a revenue-raising measure to pay for the payroll tax cut extension. "There have been discussions about dropping it. But we haven't reached any decisions yet,'' the aide said.
That meeting occurred a few hours after Reid went to the White House with several of his top lieutenants to meet with Obama about the two big issues. "It went well. We discussed strategy. We're on the same page," Sen. Charles E. Schumer of New York said after the meeting.
Democrats stood by a tough strategy laid out by Reid's team, in consultation with the White House, that called for continuing to delay action on appropriations until agreement is reached on the payroll tax.
A number of Democrats, including Mary L. Landrieu of Louisiana, vowed to stand by Reid. And Landrieu echoed Reid in insisting that some disputes remained over the appropriations conference agreement — despite GOP contentions to the contrary.
"No, that hasn't been resolved yet," Landrieu said. "The leadership is busy at work trying to figure it all out."
Democratic aides said party leaders were worried that passing the appropriations measure would relax pressure on House and Senate Republicans to vote for the payroll tax cut.
Kyl, however, said the apparent willingness of Democrats to drop the millionaire surtax might help expedite an agreement on both the payroll tax cut extension and appropriations. "That's a good start," he said, adding that talks between Boehner and Reid were crucial so that "the two of them can figure out what can pass the House and the Senate."
Regardless, Boehner and McConnell were in sync Wednesday, saying it was up to Reid to introduce legislation that could pass the Senate.
"Our friends across the aisle have no plan and some might suggest no desire to pass a payroll tax cut extension — the president's top priority — extend unemployment insurance or ensure seniors' access to medical care," McConnell said Wednesday morning on the Senate floor. "It is their responsibility in the majority to do that."
Later in the day, Boehner sent the same message. "It's time for the Senate to do its job," he said.
For their part, Democrats say that it will be impossible to forge a bipartisan compromise without bipartisan negotiations. Even if Democrats drop the millionaire surtax, it was not clear if that alone will satisfy House and Senate Republicans.
For weeks, Reid has said that he would be happy to extend the payroll tax cut without offsetting with tax increases or spending cuts. At least one Republican senator, Scott P. Brown of Massachusetts, has also endorsed such a plan. But other moderate Republican senators, including Olympia J. Snowe of Maine, have said the payroll tax cut extension must not add to the deficit — a position also held by Boehner.
To date, the Senate has voted on two Democratic bills (S 1917, S 1944) that would reduce the employee share of the Social Security payroll tax to 3.1 percent from its current rate of 4.2 percent. Before 2011, the rate was 6.2 percent. Both included some version of a millionaires surtax and both were blocked by Republicans.
More than half the Republican caucus has also voted against a payroll tax cut extension bill (S 1931) backed by McConnell, voicing skepticism about its economic benefits.
Unlike the House, the Senate has not voted on legislation to renew long-term unemployment benefits or prevent cuts in Medicare reimbursements to doctors. It is generally understood that those items will be included in a final agreement on the payroll tax cut.
Looking for Compromise
The House-passed payroll tax cut measure includes provisions that are anathema to Democrats, including one to force the Obama administration to quickly decide whether to grant a permit for construction of the Keystone XL oil pipeline from Canada to the Gulf of Mexico.
That provision alone has drawn a veto threat.
Some lawmakers say this sort of brinkmanship is routine and an agreement will be reached.
"I think that maybe by this weekend or Monday, the government will be funded and there will be a payroll holiday in place," said Sen. Bob Corker, R-Tenn., although he conceded he did not know how that would happen. "I really think all this will be dealt with. We'll go home with a whimper."
Sen. Benjamin L. Cardin, D-Md., also said he thought a deal might be reached by the weekend.
"You have to have a little confidence. Unfortunately this is the way it sort of plays out," Cardin said. "I think on most of the issues, there is a general understanding of where we need to be in order to resolve our differences. Now it's up to our leaders to bring us together and get it done."
Richard E. Cohen, Sam Goldfarb, Niels Lesniewski, Frances Symes and Ben Weyl contributed to this story.
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