In remarks from the White House briefing room, President Obama on Friday urged Congress to “keep working without drama, without delay to reach an agreement that extends this tax cut as well as unemployment insurance through all of 2012.”
He also told reporters that he believed a long-term extension of the payroll tax cut “should be a formality.”
Of course, raising the debt ceiling had once been considered a formality, too.
The reality now on Capitol Hill is that those formerly-routine measures have become battlegrounds on which a broader fight is being waged — and while the players may be different, the payroll tax negotiations that will rev up again next month are only the latest iteration of a battle that has been playing out in Congress all year.
Whether it was the payroll tax cut, the “supercommittee,” the debt ceiling or the several government funding resolutions this year, lawmakers have been butting heads over the same issue: where to find savings in the federal budget.
The debt-ceiling fight has been the biggest-picture of them all. Both parties in August agreed on a deal to save a total of $2.1 trillion over the next decade — $917 billion in reductions in agency funding as well as an additional $1.2 trillion that would have been divvied up by the bipartisan supercommittee, but instead is now on track to be enacted by an across-the-board cut to defense and non-defense spending.
In the payroll tax fight, both sides were aiming to find savings of about $200 billion in order to offset the cost of extending the payroll tax holiday, unemployment insurance, the “doc fix” and other provisions for another year.
That amount may seem like a pittance compared to $2.1 trillion, but $200 billion — stretched over 10 years — would roughly equal the same amount of savings enacted by the debt-ceiling deal.
In the payroll tax talks that culminated last week in a two-month deal, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) were only able to agree on $33 billion in savings, and the battle that begins January will pick up where those negotiations left off.
While the two might not appear to be connected, the reason the supercommittee failed is the same reason Reid and McConnell fell short of their $200 billion goal: the difficulty of finding more budget savings that both parties agree to. And in the case of the payroll talks, it wasn’t that leaders on one side or the other didn’t want a full one-year deal but rather that they didn’t agree on how to get there.
Some of the bipartisan solutions that lawmakers have put forward are ones that were identified in the spring and summer negotiations led by Vice President Joe Biden as well as in the supercommittee talks.
The question going forward is whether lawmakers will seek to draw from among the other bipartisan ideas discussed in those talks — and if so, which ones.
There’s also the question of whether the bipartisan, bicameral members of the payroll tax conference committee will try to devise some new ideas of their own, and whether Democrats will push for the inclusion of new revenue.
That the two-month deal forged by McConnell and Reid relies on a Fannie/Freddie offset spread out over the next 10 years would suggest that lawmakers will be hard-pressed to find savings. On Friday, as the final few members in Washington were heading out of town, House Minority Whip Steny Hoyer (D-Md.) declined to speculate about how lawmakers may resolve the next round of the spending battle.
“Now is not the time to get into the specifics of the negotiations. ... There are differences between the two parties, which is why this extension was necessary,” he said, adding: “We’ll obviously have to deal with those details.”