Both parties appear to be inching towards striking a compromise over an extension of payroll relief, but Senate leaders may put forward a temporary measure to prolong the tax cut by two months if a final deal can’t be reached before thier holiday recess.
A larger deal appeared more likely after Democrats agreed to drop a surtax on millionaires, a provision that the GOP declared dead on arrival. However, key differences remain, including language that would force the administration to move forward on the XL pipeline.
The payroll cut, which reduces payroll taxes from 6.2 percent to 4.2 percent, is set to expire on December 31st if a deal is not reached. The White House has stressed that if action is not taken, Americans will pay an additional $1,000 in payroll taxes.
Earlier this week, disagreements over a payroll plan helped trigger zero hour panic over a possible government shutdown. Senate Majority Leader Harry Reid (D-Nev.) initially asked Senate Democrats to hold-off on signing off on approving conference report for a $1 trillion spending bill that would keep the government operating in an apparent attempt to convince House Republicans to stay in town and negotiate. However, the omnibus bill was agreed to Thursday night.