House and Senate negotiators made halting progress Thursday on legislation to extend a two percentage point cut in payroll taxes, but big roadblocks remained.
Lawmakers cleared away noncontroversial issues like keeping welfare recipients from using debit cards in strip clubs, casinos and liquor stores and extending a tax break for small businesses that purchase new equipment.
The negotiating panel focused on lesser issues in hopes of creating momentum to get an agreement. But it became becoming increasingly apparent that the public talks, despite a civil, cooperative tone, aren't moving fast enough to meet the Feb. 29 deadline set before Christmas, when bickering lawmakers approved a two-month extension of the tax cut and other provisions. Lawmakers must pick up the pace when talks resume next week to have any hope of success.
A deadlock would likely touch off a political firestorm.
The panel's discussion Thursday revealed a major rift over a proposal by House Republicans to block new EPA rules regulating emissions from incinerators and industrial boilers like those used in making paper. Democratic leaders and the White House support the rules.
The bill is eagerly sought by President Barack Obama to ensure the economy doesn't fall into a double dip recession. It would extend the payroll tax cut, renew jobless benefits for the long-term unemployed and prevent doctors from being whacked by a 27 percent cut in their Medicare payments. It also includes several unrelated measures such as suspending the industrial boiler rules, which Republicans and some Democrats warn would cost businesses billions of dollars to comply with.
The House-Senate conference committee has yet to turn to the heart of the negotiations, which involve finding ways to defray the $150 billion-plus cost of the legislation. Republicans controlling the House have proposed raising Medicare premiums for higher-income seniors, freezing the pay of federal workers for another year and requiring them to contribute more toward their pensions, and auctioning broadcast spectrum.
The top Republican on the panel, Rep. Dave Camp of Michigan, has invoked procedural rules that could block Democrats from including their priorities, such as renewing expired tax breaks for clean energy investments. It also would block Democrats from introducing alternative ideas on how to pay for the measure.
Camp may have to relent, but the glacial pace of the negotiations already has lawmakers fretting they won't meet the deadline. Some Democrats said the talks should focus on three core provisions: the payroll tax cut, jobless benefits and fixing the Medicare payment system.
"I would urge us to refocus on the three things that most Americans expect us to get done," Rep Xavier Becerra, D-Calif., said after the panel spent almost an hour quarreling over boiler regulations.
But Sen. Max Baucus, D-Mont., said the talks should be expanded to include 130 or so tax breaks that expired in December. Renewing these so-called tax extenders would cost more than $30 billion and would make the panel's work even more difficult, and Camp sounded skeptical.
On a positive note, the panel quickly agreed to renew welfare assistance, though there remained a split over whether to also renew supplemental grants to 17 states with low welfare benefits. The measure includes a House GOP provision that would prevent welfare recipients from withdrawing benefits at ATMs located in strip clubs, casinos and liquor stores.
The panel also reached bipartisan agreement on an $8 billion provision to extend a 100 percent deduction on certain purchases of capital equipment. Baucus supported the move but noted that economists generally don't think it delivers "much bang for the buck" in terms of boosting the economy.