Payroll Tax Cut Votes Reveal Washington's Political Fault Lines

Congress will likely pass some form of a payroll tax cut before the end of the year, but getting there has been a painful process that shows just how divided Democrats and Republicans remain—and where the fault lines lie.

In the latest go-round in Washington, the U.S. Senate on Thursday scotched two plans to extend a Social Security payroll tax cut, one proposed by Democrats and the other by Republicans. The failed votes achieved nothing more than leaving lawmakers with more negotiations ahead this month as they seek a compromise on a core component of President Barack Obama’s jobs program.

The first vote to fail was a Democratic measure that in 2012 would expand the cut in payroll taxes for employees, which now stands at 4.2%, to a 3.1% break for one year. The legislation would also cut in half, to 3.1% from 6.2%, the employer-side Social Security payroll taxes.

However, the Democrats proposed paying for the $265 billion tax cut by adding a 3.25% surtax on income exceeding $1 million, known as “the millionaires’ surcharge,” which led Republicans and a few Democrats to join in killing the measure on a 51-49 vote, short of the 60 votes required for passage under Senate rules.

For the first time, a lone Republican, Sen. Susan Collins of Maine, voted in favor of the millionaires’ surcharge. When the Republicans came forward with their proposal, a $120 billion extension of the existing 2 percentage point employee tax cut paid for with a freeze on federal workers’ pay through 2015, they too were slapped down in a surprising vote that had Democrats and more than two dozen Republicans going against the plan in a 78-20 vote.

Both sides expressed frustration and pointed fingers at the other side of the aisle. Clearly, the two parties are seeking to win political favor with voters as the 2012 presidential election looms.