As lawmakers return to Washington this week and next, top on their agenda will be to start hashing out a full-year deal to extend the two-month payroll tax cut that was approved before the holiday recess and that expires on Feb. 29.
The Temporary Payroll Tax Cut Continuation Act of 2011 extends the two-percentage-point payroll tax cut for employees, continuing the reduction of the Social Security tax withholding rate from 6.2% to 4.2%.
Senate Majority Leader Harry Reid (right), D-Nev., said in an interview on NBC’s Meet the Press on Sunday that “the number one goal, and I hope the Republicans have learned a lesson, [is] extending the payroll tax. That was a disaster for [Republicans]. Can you imagine Republicans … were opposed to lowering taxes?” Added Reid: “So I would hope that they understand that everything doesn’t have to be a fight.”
But Sen. Michael Crapo, R-Idaho, remarked in late December when he was named by Senate Republican Leader Mitch McConnell, R-Ky., to a conference committee responsible for striking a payroll tax cut deal, that “These deliberations will be neither easy nor quick.” The conference committee will also address extending unemployment insurance benefits.
Rep. Steny Hoyer, D-Md., said on Tuesday, however, that he is “very hopeful” that Congress can pass a payroll tax cut extenstion for the remainder of 2012 before the end of February.