Senate Republicans propose plan to pay for payroll tax cut
November 30th, 2011
07:25 PM ET
8 years ago

Senate Republicans propose plan to pay for payroll tax cut

Washington (CNN) – In an effort to offset the cost of extending the current payroll tax cut for one year, Senate Republicans on Wednesday proposed freezing federal salaries, reducing the federal work force and keeping millionaires from getting food stamps and unemployment benefits.

The proposal would raise the $120 billion to cover the payroll tax and would bring in an additional $111 billion Republicans say would be used to pay down the nation's debt.

Details of the GOP plan came a day after party leaders first publicly embraced continuing the tax break, which many complained was not successful in stimulating the economy.

"It's important to underscore, however, that the only reason we're even talking about extending a temporary cut in the payroll tax is because President Obama's economic policies have failed working Americans," Senate Minority Leader Mitch McConnell, R-Kentucky, said in a statement.

Democrats want a broader payroll tax cut than Republicans and want to pay for it with a surtax on millionaires.

Democrats reacted warily to the GOP plan but did not reject it outright. One senior Democratic aide told CNN said there is "skepticism" among Democrats because Republicans want to "cherry pick" items discussed in the context of a broader deficit-reduction agreement by the so-called super committee. The aide said Democrats might be flexible on how the costs are offset if Republicans show similar flexibility in expanding the tax break.

In a statement, a spokesman for Senate Majority Leader Harry Reid, D-Nevada, said Democrats are "glad" Republicans now want to extend the tax break.

"The Republican proposal cannot pass the Senate as it stands, but now that Republicans have reversed their position on the middle-class tax cut, we look forward to working with them to negotiate a consensus solution," spokesman Adam Jentleson said.

Republican aides said their plan – which drew on ideas from President Barack Obama's deficit commission – would impose a three-year freeze on federal salaries and reduce the size of the federal work force by 10% by not replacing workers when they quit or retire.

In addition, in an apparent counter to criticism from Obama and other Democrats that Republicans protect millionaires, the GOP plan would require high-income Americans earning $750,000 or more to pay higher premiums for Medicare and would prevent millionaires from getting food stamps or unemployment compensation. A Republican aide cited the Congressional Budget Office as determining that these three items would raise about $9 billion over 10 years, most of it from the means-testing of Medicare.

However, "several hundred million dollars" would come from banning food stamps and unemployment compensation. The aide explained there are examples of high earners losing their jobs and then filing for and getting these benefits.

The Republican plan also includes a provision called the Buffett Rule Act – named for investor Warren Buffett, who recently complained his secretary pays taxes at a higher rate than he does.

The provision would allow taxpayers "who feel they are not taxed enough to voluntarily donate any amount of money to the U.S. Treasury on their tax returns for the purpose of paying down the national debt," according to a Republican summary of their proposal.

The Republican payroll tax plan is narrower than the one Democrats are pushing. Republicans would extend the current law, which reduced the 6.2% payroll tax for individuals to 4.2%. Democrats want to lower the tax to 3.1% and extend it partially to employers.

The Republican plan would mean an average middle-class family would get up to about $1,000 more next year; the Democrats' plan means they would get up to an extra $1,500.

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Filed under: Congress • Republicans • Senate • Taxes
soundoff (54 Responses)
  1. Randy, San Francisco

    The GOP/Tea Party proposal must be in jest. How many millionaires are collecting food stamps and unemployment?

    November 30, 2011 07:31 pm at 7:31 pm |
  2. greencollarworker

    I have a plan... how about we halve the size of the House of Representatives and do away with the Senate entirely?

    November 30, 2011 07:32 pm at 7:32 pm |
  3. vic , nashville ,tn

    “Proposed freezing federal salaries, reducing the federal work force and keeping millionaires from getting food stamps and unemployment benefits”

    Democrats is saying let rich pay for payroll tax cut

    Republicans is saying let poor pay for payroll tax cut

    Republicans will reelect Obama

    November 30, 2011 07:33 pm at 7:33 pm |
  4. buck cameron

    TLet's cut the v-22 Osprey (that the Pentagon didn't want), and eliminate farm subsidies. That should get us a good way toward that goal. If we need more, I think I can find a lot more welfare to the wealthy in Republican districts to cut.

    November 30, 2011 07:36 pm at 7:36 pm |
  5. Part of the 99%

    So the GOP plan is to freeze the pay for Federal workers (who happen to be middle class) to protect the richest among us from getting a small tax increase. I believe the richest among us are far more able to afford such a thing. These folks have gotten the biggest break over the last ten years and have not created jobs. Why does the GOP continue to protect the rich at the expense of the middle class? Why do the GOP supporters still think that is the right thing to do?

    November 30, 2011 07:39 pm at 7:39 pm |
  6. Sandy

    So they plan to cut more jobs. Fail!

    November 30, 2011 07:45 pm at 7:45 pm |
  7. Wire Palladin, S. F.

    Oh good, they are going to have middle class government workers pay for it. One thing for sure, republicans will do anything to stay on the billionaires gravy train. How can anyone claim to be a republican?

    November 30, 2011 07:52 pm at 7:52 pm |
  8. CA Dream USA

    Once again cutting jobs by 200 k. (The Republicans Jobs Plan)..Increase poverty in America to protect their bank accounts and their rich buddies......

    November 30, 2011 07:52 pm at 7:52 pm |
  9. Four and The Door

    The proposal would raise the $120 billion to cover the payroll tax and would bring in an additional $111 billion Republicans say would be used to pay down the nation's debt.
    ________________________________________________________________________________________
    I am sure the Democrats would not stand for using $111 billion in new revenue or savings to pay down the debt. This is money that could be spent now. Remember, in their world whoever spends the most wins. It is so not about paying down the debt.

    November 30, 2011 07:58 pm at 7:58 pm |
  10. bobcat2u

    So all they're saying is they won't take their automatic pay raise for one year ? Man what a cop out.

    November 30, 2011 08:04 pm at 8:04 pm |
  11. Dalfrom CA

    "the GOP plan would require high-income Americans earning $750,000 or more to pay higher premiums for Medicare and would prevent millionaires from getting food stamps or unemployment compensation. "
    I would love to know how many millionaires get food stamps? I would estimate the number is zero. Come on GOP show us the statistics on the rich getting food stamps. Unemployment benefits I can say yes they can get if they were unemployed, that is their right just like any Joe the plumber.

    November 30, 2011 08:13 pm at 8:13 pm |
  12. once upon a horse

    so let me get this straight, the GOP thinks it's better to reduce the federal workforce which means putting MORE people out of work.....making sure that millionaires not get something they really shouldn't need to get anyway like FOOD STAMPS (Lord help us) and unemployment benefits and ask federal workers not to get any increase in salaries than to ask some of the upper 1% to pay a tad more in taxes to help out the rest of the nation? And McConnell has the GALL to talk about Obama's "failed" policies to help out the working class when THIS is the alternative the GOP has to offer! I thought I had heard and seen it all but this takes the cake. Yet some people want to see the GOP back in power in 2013. GEESH!

    November 30, 2011 08:18 pm at 8:18 pm |
  13. Ron

    Poor GOP. They seem to be "stepping in it" more often than Rick Perry! Imagine the backlash from government employees (many of them Republicans) when this story hits the mainsteam media. Cut 200,000 gov jobs .... Are Mitch McConnell and John Boehner just plum crazy??? Or just incompetent???

    November 30, 2011 08:24 pm at 8:24 pm |
  14. david

    dear mitch mcconnell your the very best examplw of a failed congressman. you remind me of my very little childern who didn't know what they really wanted when they kicked their feet and rolled around on the floor saying 'NO NO NO NO "! the fact that a rich man can get an unemployment check or food stamps when he looses his job does not bother me one little bit because that is just what thoese benifits are for a safty net for all americans.

    November 30, 2011 08:24 pm at 8:24 pm |
  15. Debbie

    Why freeze government workers pay when they don't freeze their own? Freeze the pay of food inspector but not any person in Congress? Let the Bush Jobs/Tax Cut bill of 2001, 2003, 2010 end.

    November 30, 2011 08:29 pm at 8:29 pm |
  16. george of the jungle

    I wonder how many millionairs get food stamps or unemployment???? Hey lets freeze wages for the poor government working stiffs. Great plan you nimrods! The republican party is the biggest joke around. Hey maybe ol newt or mitt get food stamps???

    November 30, 2011 08:43 pm at 8:43 pm |
  17. SecedingfromTexas

    Would the freeze on federal salaries include all monies paid to Congressmen/Women?
    Would the reduction of the Federal work force by 10% then increase unemployment by 10%?
    Who in their right mind would apply for food stamps and unemployment benefits if they made $750,000?
    I'm so angry, I will just have to wait for Dominican Mama, GI Joe, Sniffit, RudyNYC, and the rest of you who
    can make sense of this to explain it to me. In the meantime, taking excedrin and waiting for Jon Stewart.

    November 30, 2011 08:50 pm at 8:50 pm |
  18. Floretta

    Seriously, how many millionaires qualify for or apply for unemployment benefits and food stamps? IIRC the SNAP (food stamp) program is income based. Big savings there.

    Try again,

    November 30, 2011 08:50 pm at 8:50 pm |
  19. Henry Miller

    "Senate Republicans on Wednesday proposed freezing federal salaries, reducing the federal work force and keeping millionaires from getting food stamps and unemployment benefits..."

    Sounds good to me, especially the parts about making a lot of useless federal drones stand in unemployment lines like too many other Americans and, for the lucky ones who get to keep their jobs, reducing their pay to something more in line with the useless make-work most of them do. And the pay cuts should definitely apply to the President and to every member of Congress.

    November 30, 2011 08:53 pm at 8:53 pm |
  20. Manchurian

    "The provision would allow taxpayers "who feel they are not taxed enough to voluntarily donate any amount of money to the U.S. Treasury on their tax returns for the purpose of paying down the national debt," according to a Republican summary of their proposal." Dear Republicans: yeah, good luck with that. Either make it mandatory, or don't waste everyone's time with a joke proposal.

    November 30, 2011 08:54 pm at 8:54 pm |
  21. Anthony Antin

    I can't believe (but am forced to believe) that the Republicans are so dumb: Saying they can increase revenues by billions by 1) cutting out food stamps for milionaires (are there millions of them?) and 2) expecting high earners to make "contributions" to the government at tax time. In addition, reduce the tax break for middle class. ANYthing to protect the super rich (who must be chortling with glee as all those middle class (peasant) Republicans fight so hard for them.
    Unbelievable! Worst of all, they believe the public is dumb enough to buy it (and sadly, in millions of cases, they are right).

    November 30, 2011 09:16 pm at 9:16 pm |
  22. Conrack

    Since Senate Republicans have done absolutely nothing while the President has tried to revieve this country, McConnell and his band of Merry Morons should have their pay and benefits withheld. That should be a good start by setting a good example for all Americans. You do nothing – you get nothing.

    November 30, 2011 09:16 pm at 9:16 pm |
  23. Hawk

    Great another republican joke.

    November 30, 2011 09:27 pm at 9:27 pm |
  24. typicallll

    What a freaking Joke the republican party is... Stealing ideas from the democrats.

    November 30, 2011 09:29 pm at 9:29 pm |
  25. ngc1300

    Millionaires get food stamps and unemployment?! We better give them another tax break so they don't have to beg!

    November 30, 2011 09:51 pm at 9:51 pm |
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