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Payroll Tax Cut: Harry Reid Says No Christmas Vacation For Obama, Senate Until Measure Passes

Reid Schumer Casey Murray

First Posted: 12/07/11 02:29 PM ET Updated: 12/07/11 02:33 PM ET

WASHINGTON -- The Senate and President Obama will not go on their Christmas vacations until Congress extends the expiring payroll tax cut, Senate Majority Leader Harry Reid vowed Wednesday, outlining an attempt to shame the GOP into backing a middle-class tax break.

"We are not going to go home to vacations," Reid (D-Nev.) said in a news conference on Capitol Hill. "Does this mean embarrassing Republicans, humiliating them? Probably -- as it should."

The 2 percent payroll tax cut expires Jan. 1, and unless Congress passes a new law, that expiration means the average household will pay $1,000 more in taxes next year. Democrats have proposed expanding the cut to 3.1 percent, and paying for it with a 1.9 percent surtax on income above $1 million.

Reid, who spoke to Obama earlier, said the president and Democrats both agreed that the issue was too important to leave undone.

"Michelle and the girls will have a great time in Hawaii; they don't need me there," Reid said, paraphrasing the president's response to the situation.

Republicans have insisted they are in favor of extending the cut for another year, but they have so far produced only one proposal, which failed with just 20 votes in the Senate last week.

Speaking shortly before Reid announced Christmas showdown, House Speaker John Boehner (R-Ohio) said his members were still trying to put a proposal together.

"We're continuing to work on this, and we expect that, before the week's over, we'll talk to our members again," Boehner told reporters after his caucus leadership met. "But I think it's important for us to have these deliberations with our colleagues before we introduce a bill, and we'll do it in just that way."

Some members of the GOP have started floating the idea of a straight rebate aimed at keeping money in pockets.

Boehner sounded like he might favor that approach. "The very first stimulus bill, you know, we wrote checks to the American people. Some would argue that that's a more efficient way of dealing with this," he said. "The concern about the payroll tax cut is this, is that we're taking money out of the Social Security Trust Fund."

Sen. Bob Casey (D-Pa.), the sponsor of the tax cut bill in the Senate, insisted that the break does not take money from Social Security because the bill specifies that the funds be replaced from the general treasury -- and paid for by the tax on the rich. He cited a letter from the chief actuary of Social Security saying the trust fund would be "unaffected by enactment of this provision."

Sen. Chuck Schumer (D-N.Y.), the Democrats' message architect, said that the GOP has been "tied in a knot" over the issue. Indeed, Sen. John McCain (R-Ariz.) conceded the Democrats are winning the debate.

Reid argued that the real problem for the Republicans is that they want to protect the rich, not the middle class.

"We [Democrats] have been for reducing taxes for the middle class -- that's what the stimulus bill was all about. We provided tax cuts for virtually 95 percent of Americans," Reid said. "This is a continuation of what we started back then."

Even if the payroll cut is needed again after next year, he noted that Democrats have the stronger position because under current law the Bush-era tax cuts extended last year expire after 2012. Ultimately, this can provide more than enough offset for a middle class break.

"The taxes for the richest are going to go up. Period," Reid said.

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