Spokane7
55°
January 17, 2012 in Nation/World
Congress to tackle extending tax break
Democrats favor fees, Republicans want cuts
WASHINGTON – Republicans would cut federal employee benefits. President Barack Obama would raise fees for airline passengers and eliminate Saturday mail delivery. Democrats in Congress would charge employers higher premiums for federal pension guarantees.
As Congress returns from a three-week holiday break, those are a few of the ideas for how to pay for extending an average $20-a-week Social Security payroll tax cut through the end of 2012 without adding to the government’s long-term debt.
Obama and fellow Democrats insisted on taxing the wealthy to offset the deficit impact of the payroll tax cut and of providing jobless benefits to the long-term unemployed. While still useful as campaign fodder, that idea is largely a bygone one.
House and Senate negotiators are drawing on Obama’s budget and the work of the defunct congressional supercommittee on deficit reduction to come up with the $160 billion or so needed to continue the tax cut and federal jobless benefits. Both are set to expire Feb. 29.
Republicans controlling the House took a political drubbing in a December battle that produced a two-month extension of unemployment aid and the 2 percentage point tax cut for 160 million workers.
While House Republicans went after Democratic sacred cows such as federal worker benefits and health care spending, leading senators made progress on a bigger deal before it collapsed because of a lack of time, aides in both parties say.
Health care remains part of the equation. To prevent a 27 percent cut in Medicare payments to doctors under an outdated 1997 formula, negotiators are trying to find $39 billion in cuts elsewhere in health care spending. That would fix the problem for two years.
Some of the money being considered to offset the lost payroll tax revenue is practically free. For example, auctioning portions of the electromagnetic spectrum to wireless companies. That would raise perhaps $16 billion over the coming decade.
Obama wants to raise $4 billion more by selling off surplus federal property. There’s an additional $3 billion to be reaped by preventing state and local government workers from improperly claiming Social Security benefits.
One idea seen as likely to make it into the final package is the repeal of a tax break taken by businesses that buy corporate jets. It would raise about $5 billion over a decade.
Other ideas illustrate the uneasy trade-off of big spending cuts or new fees stretched out over a decade to finance only 10 months of a temporary tax cut.
For instance, eliminating Saturday mail delivery and other Postal Service changes raise enough money to pay for only about two months of the payroll tax cut. That may seem like a bad deal for many Americans, especially retired people who don’t get the tax cut. The postal reform plan was proposed by Obama and embraced by the supercommittee, but so far has been left out of the payroll tax legislation.
A new $100 per flight fee on airlines and owners of private jets that would bring in more than $1 billion a year seems to be gaining momentum. So is a proposal to raise billions of dollars by making businesses with underfunded defined benefit pension plans pay higher premiums to the Pension Benefit Guaranty Corp., which insures such plans. Many businesses and their GOP allies in Washington are resisting the proposals.
Democrats appear set to fight moves by House Republicans to require federal civilian workers to contribute 1.5 percent more of their salaries toward their pensions and absorb a third straight annual pay freeze. Obama wants to give federal workers a one-half of 1 percent pay increase in 2013.
Republicans’ proposal to trim the federal workforce through retirements and attrition faces opposition from Democrats who supported it as part of a big deficit-cutting package. Politically wrenching changes to Medicare appear to be off the table.
“When you’re talking about a major $1.2 trillion or more deficit reduction plan, there are some things you’re willing to consider that you might not in the context of a much smaller agreement,” said one Democratic negotiator, Rep. Chris Van Hollen of Maryland.
© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Salmonella linked to chicken handling 
dataxman on January 17 at 4:22 a.m.
We are over $15 trillion in debt (not including unfounded liabilities like federal pensions and SS liabilities) so why even pretend we need to ‘pay’ for this. Just slap it on the credit card and give the masses their $ 2.50 a day break and we continue down the path to a Greece-like implosion.
RedCedar on January 17 at 7:57 a.m.
Exactly. All of these proposals are either about social engineering (trying to change people’s behavior) or political grandstanding (trying to create a campaign talking point), not about actually balancing the budget. When it comes to reducing expenses, you have to cut social security, medicare, and/or defense, and you have to cut them significantly overall, not just cut out on or two minor items that might be good for a campaign talking point. When it comes to raising revenues, you have to raise the income tax rates, overall, for everyone, and/or impose new taxes such as a national sales tax or a more wide-ranging estate tax. Raising excise taxes and social security withholding could help too, but again fiddling with little details around the edges is good for political talking points but doesn’t amount to enough money to make any difference.
The only proposal mentioned in this article that is unequivocally good even regardless of its budgetary impact is selling off surplus property. This is something the government has been doing way too little of in recent years. They tend to hold onto real property forever, or impose so many conditions on prospective buyers that nobody is willing to deal with it, and when it comes to personal property, most of it is junked rather than auctioned off these days.
Beyond that, all the proposals sound more like ways to attack the enemy party, usually by proposing something they know they won’t accept, than ways to make a dent in what is now a federal debt amounting to around $50,000 per person.
The inescapable reality is that we are at best at the beginning of a period of severe inflation, which is the modern method of confiscating the savings of prudent people without any politician having to vote for it, or at the end of an empire, when our country simply shuffles off into meek dotage like Britain a century ago. Congress is not going to change. The fiscal policies of a President Romney or a President Obama won’t differ. Under our republican system of government, the people basically get what they want, and what the people want is free stuff from the government.
schleufer on January 17 at 8:05 a.m.
then we have eric cantor who blocked this bill that would stop insider trading for them selves is a good idea.
http://www.cnbc.com/id/45612773
that bill has been around since 06 but he thinks they better give it a good look before rushing into things. with that inside info they out do the experts when it comes to buying stocks.
The_Seer on January 17 at 8:24 a.m.
I hope everyone notices that eliminating the cap on earnings currently employed by the Social Security administration isn’t on the table.
Why? It is patently unfair for people making below the cap to pay the tax on every dollar they make while a millionaire only pays tax on one out of every ten dollars. For a billionaire, they are taxed only on one out of every ten thousand dollars.
Remove the cap and fund these programs into perpetuity and use some of the surpluses sure to be generated to reduce the federal deficit.
D Statler on January 17 at 8:53 a.m.
I don’t believe I am sayin this. “Ron Paul looks like the only politician with a credible view on economics”. I would agree that selling of un-necessary property is a good thing. The funds will pay the interest on our debt for about 5 minutes. :^( I would hope that the monies gained from such sales would be earmarked for the debt. Fiscal responsibility seems out of the mental grasp.I might mention it is not too hard to figure it out. If you don’t have it,don’t spend it. So simple a janitor can figure it out :^)
RedCedar on January 17 at 9:31 a.m.
I like Ron Paul for his honesty and because the RNC, DNC, and NBC are scared of him, but I wouldn’t call his economic views “credible”. They’re the wackiest part of his beliefs. If by some fluke or providence he got elected, however, I wouldn’t worry that he’d abolish the Federal Reserve or restore the gold standard. Congress wouldn’t let him. What he would do is give us an honest accounting of where the money is coming from and where it’s really going. Also, as chief of the bureaucracy he’d have almost dictatorial power to root out waste, fraud, and incompetency. That still wouldn’t balance the budget but it might make Americans feel less badly about paying their taxes. There’s even a slim chance that, if they could see the money wasn’t being wasted, they might be willing to pay more. Slim, but non-zero. It’s happened before.
Nugget on January 17 at 9:46 a.m.
How about having all those working for, or involved with, the government paying in to social security? I get really tired of the “take it from the people” mentality yet they don’t pay in to that “people” fund.
jane on January 17 at 10:01 a.m.
All members of the government pay into Social Security just like the rest of us, have done so since 1984. This is one of those misinformed talking points like when people say that members of congress get full pay when they retire from congress regardless of how long they were there, no truth to that either but it has been said enough by poeple on TV and the radio that everyone beleives it.
jane on January 17 at 10:04 a.m.
Not too difficult to research either:
http://www.senate.gov/reference/common/faq/retirement_for_members.shtml
Jeffrey_Grey on January 17 at 10:31 a.m.
RedCedar,
Remove all the “/or” from your original post and you and I will be pretty much in complete agreement.
mtharves on January 17 at 10:58 a.m.
I totally agree with Seer, at least raise the cap to the first $150,000 and that will secure SS.
johnclarke on January 17 at 11:09 a.m.
RedCedar on January 17 at 7:57 a.m.
“When it comes to reducing expenses, you have to cut social security”
I agree with most of your points - mainly cutting expenses while increasing revenue - something so simple that seems to escape so many - I take issue with your comment about social security. Why is everyone, normally Republicans always talking about “cutting” something that pays for itself? This is not an expense, and SS adds not one nickel to the debt. Can we just agree on that? SS is not something that can be “cut.” If you want to cut SS, then cut the amount you are collecting which oddly is the topic of this story. I really don’t think this is a good long term plan.
Why the hell are we suddenly worried about paying for tax cuts? We spent the last decade not worried about the largest and most destructive tax cuts in history. I say, let’s just stick to the Republican plan of never paying for anything.
However, they are all up in arms over this tiny amount of money in our pockets because we are the middle class. If we were in the top tax brackets, there would be no discussion see because we all know that the “job creators” create jobs with all those tax breaks, right?
johnclarke on January 17 at 11:10 a.m.
Thank you Jane, for using facts and data. How refreshing.
mikeln on January 17 at 11:13 a.m.
As far as the band width goes, this belongs to all of us and should only be rented out, not sold. These companies will make us pay for them and then charge us after we have paid for them, all that money going into thier pockets. If we demand that they keep paying rent the government will keep getting the money they are going to charge us anyway. Just another givaway of public property for the enrichment of the few.
dataxman on January 17 at 11:43 a.m.
Seer- the cap on earnings is there because there is a cap on benefits. If we tax more of a person’s wages then we should offer a higher maximum monthly payment. Won’t exactly shore up the program.