Payroll tax fight: a win for both Occupy Wall Street & the Tea Party?

at 04:35 PM ET, 12/05/2011

Both Democrats and Republicans are pushing new payroll tax proposals after their parties’ initial bills failed in the Senate last week. The most controversial stuff is still in there — for the Democrats, a smaller version of the millionaire surtax, and for the GOP, a plan to cut the federal workforce. President Obama is wading into the fight as well, slamming Republicans today for “fight[ing] tooth and nail to protect high-end tax breaks for the wealthiest Americans. But in fact, there’s an emerging bipartisan consensus that wealthier Americans and government workers should pay for the tax-cut extension.

(Getty Images)
Senate Democrats are proposing a smaller, $180 billion package that would lower the payroll tax cut further to 3.1 percent for employees, while letting the employer tax cut to expire, as Politico reports. In addition to the millionaire’s surtax, Democrats have also embraced GOP Sen. Dean Heller’s plan to means-test benefits like food stamps and unemployment insurance, excluding the wealthy from receiving benefits — an idea that was part of the payroll tax bill that Republicans pushed last week. House Republicans are holding onto that idea, but they also want to increase means-testing in Medicare Part B, which would force wealthy seniors to pay more for doctors’ visits and outpatient health care.

There’s a chance, moreover, that federal workers will also have to take the hit for the payroll tax extension. Democrats opposed the GOP plan to extend the federal pay freeze until 2015 and slash the workforce by 10 percent. But House Republicans also want to reduce benefits for federal workers’ pension plans — a change that Democrats included in one iteration of the supercommittee, along with cuts to agriculture subsidies and other mandatory federal programs outside of health care. Democrats now say they’re willing to put such cuts on the table yet again to pay for the payroll tax break.

So there’s certainly room for a deal given these two areas of overlap. Interestingly, they’re also a nod to the populist movements that have emerged on both right and left: Occupy Wall Street’s targeting of the rich and the tea party’s vilification of the federal government.

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