WASHINGTON – Republicans would cut federal employee benefits. President Barack Obama would raise fees for airline passengers and eliminate Saturday mail delivery. Democrats in Congress would charge employers higher premiums for federal pension guarantees.
As Congress returns from a three-week holiday break, those are some ideas for how to pay for extending an average $20-a-week Social Security payroll tax cut through the end of 2012 without adding to the government’s long-term debt.
Obama and fellow Democrats insisted on taxing the wealthy to offset the deficit impact of the payroll tax cut and of providing jobless benefits to the long-term unemployed. The idea is largely a bygone one.
Congressional negotiators are drawing on Obama’s budget and the work of the defunct congressional supercommittee on deficit reduction to come up with the $160 billion needed to continue the tax cut and federal jobless benefits. Both of are set to expire Feb. 29.
Republicans controlling the House took a political drubbing in a December battle that produced a two-month extension of unemployment aid and the 2 percentage point tax cut for 160 million workers.
While House Republicans went after Democratic sacred cows such as federal worker benefits and health care spending, leading senators made progress on a bigger deal before it collapsed because of a lack of time, aides in both parties say.
Health care remains part of the equation. To prevent a 27 percent cut in Medicare payments to doctors under an outdated 1997 formula, negotiators are trying to find $39 billion in cuts elsewhere in health care spending, fixing the problem for two years.
Some of the money being considered to offset the lost payroll tax revenue is practically free. For example, auctioning portions of the electromagnetic spectrum to wireless companies. That would raise perhaps $16 billion over a decade.
Obama wants to raise $4 billion more by selling off surplus federal property. There’s an additional $3 billion to be reaped by preventing state and local government workers from improperly claiming Social Security benefits.
One idea seen as likely to make it into the final package is the repeal of a tax break for businesses that buy corporate jets. It would raise about $5 billion over a decade.
Republicans’ proposal to trim the federal workforce through retirements and attrition faces opposition from Democrats who supported it as part of a big deficit-cutting package. Politically wrenching changes to Medicare appear to be off the table.
Despite opposition, Republicans appear likely to win a provision that would save at least $9 billion by blocking illegal immigrants from claiming the refundable child tax credit.
Lawmakers already have snapped up $36 billion in projected receipts over the coming decade to finance the two-month jobless benefits and payroll tax extension enacted just before Christmas. The money comes from a 0.10 percentage point increase in home loan guarantee fees charged by mortgage giants Fannie Mae and Freddie Mac that promises to increase the cost of a typical $200,000 mortgage by more than $5,000 over 30 years.
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