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Payroll Tax Cut Extension Rejected In Senate Vote

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WASHINGTON -- The Senate failed Thursday to pass an extension of a payroll tax cut, leaving in limbo a break that saved working class households about $1,000 apiece this year.

Democrats sought to extend and expand the break, while paying for it with a 3.25 percent surtax on incomes over $1 million. Just one Senate Republican, Maine's Susan Collins, voted for the middle class break, which died 51 to 49 in an unsuccessful effort to end a Republican filibuster. Three Democrats opposed the bill.

"I am extremely disappointed that Republicans' insistence on protecting millionaires from paying a penny more in taxes has blocked our effort to extend and expand the payroll tax cut for millions of middle class families and small business owners," said Sen. Patty Murray (D-Wash.).

Minutes later, a Republican version of the measure was blocked by Democrats and a majority of the GOP senators.

Democrats had complained that it was too small of a break -- and that it was paid for by cutting 200,000 federal workers.

"Tonight's votes highlight a sharp contrast between the two parties: Democrats voted to put more money in the pockets of the middle class families who need it most, while Republicans would only support a bill that exacts a price from middle class workers while protecting the wealthiest Americans," Murray, the fourth-ranking Democrat, said.

Democrats pointed to the defection of Republicans from the GOP bill as an embarrassment for Senate Minority Leader Mitch McConnell (R-Ky.), who had predicted there would be support for some sort of payroll tax cut extension.

"Republicans spent this week trying to convince us that they support middle class tax cuts, but tonight a majority of Senate Republicans voted against their own bill -– calling into question whether they support middle class tax cuts at all," said Senate Majority Leader Harry Reid (D-Nev.).

"I was encouraged to see one Republican join Democrats in asking millionaires to pay their fair share," Reid said. "But because every other Republican continues to insist on protecting millionaires, middle class families could face a $1,000 tax increase next year."

Reid has said he will bring the measure back. Most Republican leaders have also said that ultimately the payroll tax cut should be extended, but it was not clear how after Thursday's twin failures.

President Barack Obama released his own statement to hammer the middle class message that's emerging as a key theme of his campaign.

"Tonight, Senate Republicans chose to raise taxes on nearly 160 million hardworking Americans because they refused to ask a few hundred thousand millionaires and billionaires to pay their fair share," he said. "That is unacceptable. It makes absolutely no sense to raise taxes on the middle class at a time when so many are still trying to get back on their feet."

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