If the supercommittee does not finish on time, it would lose special procedural powers to push a tax-and-spending plan through a bitterly divided House and Senate, leaving congressional leaders without an easy path to compromise on the expiring provisions — and a potentially nasty holiday-season fight on their hands.
“We don’t have the answers,” Sen. Richard J. Durbin (Ill.), the No. 2 Democrat in the Senate, conceded recently as it became evident that the panel’s effort had stalled. “The supercommittee was put in place” to develop “a strategy to take us through the election” by resolving the toughest outstanding budget problems, he said. “If they don’t succeed, then we have to address these issues.”
Durbin said he is “prepared to add to the deficit at this moment” to extend the economic measures and “bring us out of this recession, to put people to work.” But many Democrats have conflicting emotions about the measures, especially the one-year payroll tax cut.
In addition to adding more than $100 billion to budget deficits, the tax cut would reduce Social Security’s dedicated financing stream, making the program dependent on congressional appropriations at a critical moment.
“There are a lot of other casualties that will be collateral damage with the failure of the supercommittee,” said Rep. Gerald E. Connolly (D-Va.), a key House moderate, adding that the payroll tax cut would be a particularly “heavy lift.”
“You don’t want to do anything at this juncture to retard what seems like it’s an uptick in the economic growth,” Connolly said. “But on the other hand, we’re worried about Social Security. Do we really want to be starving it of revenue?”
Republicans are also divided. Rep. Nan A.S. Hayworth (N.Y.) said she is “extremely sympathetic to extending” the payroll tax holiday, but Rep. Jason Chaffetz (Utah) said he would have trouble supporting it without matching cuts in spending.
“I’m in favor of lower taxes. But, when you don’t couple it with a spending decrease, it’s a real problem,” Chaffetz said. “And we don’t seem to be able to cut anything around here.”
President Obama has demanded a more ambitious economic package that would, among other things, expand the payroll tax cut to employers as well as workers and overhaul the unemployment insurance system. In September, he called on the supercommittee to come up with a way to cover the $447 billion cost so the package wouldn’t increase budget deficits. Obama suggested raising taxes on corporations and the wealthy.