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. otermbachmann

    What the fudge is this? Are they all high? No way is that their idea, or even read the bill. Wow.

    November 30, 2011 10:11 pm at 10:11 pm |
  2. T'sah from Virginia

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

    Wait a minute – wait a minute!!! Millionaires get FOOD STAMP????? And the candidates on the RIGHT made it seem as if the people collecting FOOD STAMPS were the scum of the earth!!!!!!!!!!!!!!!!!!!! I declare WAR!!!

    ►"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◄

    McConnell – WHAT??? That's the BEST reason you can come up with? I thought you guys were FOR Tax Cuts!!! Okay McConnell – let's talk about the reasons why you're keeping the TAX BREAKS for the rich in place??? It’s Obama’s fault? If so, then why are you having CRAMPS because you have to extend the payroll tax and not even concerned about the TAX BREAKS??? Jeez!!

    Obama 2012

    November 30, 2011 10:24 pm at 10:24 pm |
  3. CBR

    Did the Republicans recommend a pay cut for themselves? Did they agree to cut back the number of people on their staffs? Did they commit to less expensive health insurance? Shall we demand that the Congress do what they ask us all to do – live on less money but do more work? They should think about giving back some of their pay as well.

    Their remarks about millionaires reflect the lack of consideration they give to those who need help right now. They know that those in the highest brackets could afford a tax increase. No one is asking them to give up all their money. Perhaps some at the top of the charts would be more comfortable taking a pay cut or giving a large sum of money to charities without taking a tax write-off..

    November 30, 2011 10:42 pm at 10:42 pm |
  4. Lini

    "keeping millionaires from getting food stamps and unemployment benefits". You have got to be kidding me. Republicans, this is laughable. These guys are acting like a bunch of kids. Partisan Politics is slowly destroying this country.

    November 30, 2011 10:42 pm at 10:42 pm |
  5. Anonymous

    I dont think that they should allow them but instead make rich people pay higher taxes than the poor people i like how the republicans are actually taking their time to consider something for once but still have a ways to go but even the dems arent perfect i think the one that helps the poor the most should be the one they pick

    November 30, 2011 10:44 pm at 10:44 pm |
  6. ithink122

    Ignoring the savings from millionaires not being allowed to apply for food stamps or unemployment, which I'd love to hear the logic behind why they were allowed to do that in the first place, the Republicans are suggesting a tax break to help the middle and lower class be paid for by...you guessed it, the middle and lower class. Those government workers who will see their pay frozen for 3 years, while cost of living and inflation continue to rise, certainly aren't upper class. They are middle and lower class people just like you and me.

    Almost half the money they save from these cuts won't even be going towards the credit, just paying down the defecit. All this is is another way for the Republicans to balance the budget on the backs of the middle and lower class. The extension of the payroll tax cut is just a bone they thought to throw the dems.

    Why do the Republican and Tea Party ground troops continue to ignore the fact that lower taxes and tax breaks for the rich simply did not produce jobs in the past 10 years. That being the case, we will pay for all economy helping and deficit reduction measures by increasing these taxes until they are at least at their Clinton era levels, including removing subsidies and loopholes.

    November 30, 2011 10:47 pm at 10:47 pm |
  7. gman

    I think that the rich should be taked more than the poor as for whos policy is better i really dont know but whichever on brings more cash to help this country and the poor and middle class should be the one they pick

    November 30, 2011 10:47 pm at 10:47 pm |
  8. ThinkAgain

    Reducing the federal workforce will increase unemployment and put further strain on social services and society at large. But then again, that's the Republican strategy, right? Make things as bad as possible for Americans, then blame President Obama, because historically, presidents have a harder time getting re-elected when the economy is down. Lord knows the Republicans don't have a record of accomplishments to run on, so they are resorting to harming us to regain power.

    Pretty pathetic!

    November 30, 2011 10:48 pm at 10:48 pm |
  9. ThinkAgain

    We should follow Germany's example. (You remember Germany, right? The only European country that isn't tanking?) Instead of laying off public sector employees, they cut back on hours until the economy improved.

    This is very similar to what a lot of private sector companies do: By having pay cuts instead of lay offs, there is less disruption in the lives of their employees, while preserving the trained workforce that contributes to the success of the company.

    But will the Repubs ever go for this? No way – their strategy is to make things as bad as possible and then blame President Obama.

    Treason, in my book.

    November 30, 2011 10:50 pm at 10:50 pm |
  10. sgurdog

    Republicans should start by freezing their own salaries, and in fact, cutting them. I would also suggest they begin cutting their staff because of the lack of action on the part of their bosses. They have NO plan and will do anything to distract from the fact that they're standing up for millionaires and billionaires, not joe the plumber.

    November 30, 2011 11:13 pm at 11:13 pm |
  11. excfo

    Way to go Republicans! I wonder who cranked up their bogus savings numbers from their latest scenario, whereby persons making over $750K would no longer be eligible for food stamps or unemployment compensation. How many citizens do you think fall into that category – 20 – 40 – maybe even 100? Food stamps cost maybe $20/week per recipient, and unemployment comp is usually less than $200 per week. What a sacrifice on the part of the GOP!!

    November 30, 2011 11:15 pm at 11:15 pm |
  12. Roco

    You have got to be kidding me!!! Millionaires getting food stamps!!! What? They got several 100,000 dependents? That's what is wrong with the system, so much freaking fraud. "However, "several hundred million dollars" would come from banning food stamps and unemployment compensation." They should not be getting food stamps any way.

    November 30, 2011 11:16 pm at 11:16 pm |
  13. excfo

    BTW: I have never filed to claim food stamps, but I have filed a few times over the years for unemployment compensation. If the GOP has identified persons who make over $750K per year, who have filed for and received either unemployment benefits or food stamps, those individuals should be prosecuted for criminal fraud and severely fined. That could raise a lot more money than the plan they have proposed. Persons in this category would not qualify for benefits unless they lied in filling out the applications.

    November 30, 2011 11:29 pm at 11:29 pm |
  14. Republican who supports President Obama

    These GOPers just do not know when to quit this crap. Cut defense and raise taxes on the rich!

    November 30, 2011 11:33 pm at 11:33 pm |
  15. vc

    The repubs are still trying to protect the wealthy!!

    November 30, 2011 11:36 pm at 11:36 pm |
  16. Rob in MO

    Preventing millionaires from getting food stamps or unemployment insurance will save zero dollars. This is a republican fantasy. Now, preventing millionaires from getting tax subsidies would save billions of $$$$.

    November 30, 2011 11:43 pm at 11:43 pm |
  17. Dan in Minnesota

    Once again, leave it to the buffoons in the Republican Party to sacrifice any resemblance of common sense at the altar of their new messiah- Grover Norquist. The Buffett Rule Act? Asking millionaires and billionaires to voluntarily pay more taxes becuase their secretaries are paying a higher rate then them? I guess that'll happen when pigs like Limbaugh and the Koch brothers fly. Seriously the party of Lincoln, Theodore Roosevelt. and yes, Ronald Reagan has become functionally retarded if they think that the middle class is going to continue to buy this crap. Well, maybe not, given the number of mouth breathers who listen to Limbaugh, Hannity and Beck. As you can probably tell by now, I am not registered as a Republican, but could go so far as to vote for someone who seems to have just a shred of common sense such as Huntsman, who by the way, refused to sign King Norquist's precious pledge. But his chances of winning the nomination are about the same as... well, look at my previous remarks about Limbaugh flying.

    December 1, 2011 12:17 am at 12:17 am |
  18. johnborg

    Q: Why are millionaires getting food stamps anyway? My family has an income of "0" due to terrible work-related physical disabilities and they get $90 a month for 4 people. Ridiculous.

    December 1, 2011 12:25 am at 12:25 am |
  19. unretired05

    What a GOP way to fix the economy. They campaigned on jobs,jobs, jobs! Jobs are our #1 priority!
    Little did we realize that their plan was to destroy jobs, freeze wages, and starve the poor. The real family values candidates, professing Christians that worship corporate profits at the expense of the citizenry.

    December 1, 2011 12:45 am at 12:45 am |
  20. aaron

    Not letting millionaires get food stamps and unemployment? What's happening to the Repub's taxpayer financed subsidy plans for the super rich?

    December 1, 2011 12:55 am at 12:55 am |
  21. anthony78

    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" said Mitch McConnell.
    REALLY?
    So would the same rule apply in saying President Obama's policies have failed because Republicans in congress failed as well?
    These guys are desperate. Also...
    " would prevent millionaires from getting food stamps or unemployment compensation." ??!??
    Ok.. now the (R)s are just taking us for fools. Really? This is how the country is supposed to get back on track? With decision making policies like these?
    And to think, some of you try and call Obama a joke. The current batch of Republicans and the people who voted for them are laughable.

    December 1, 2011 12:58 am at 12:58 am |
  22. logic in LA

    What!?!
    Republicans want to keep millionaires from getting food stamps? Does anyone else see the irony and illegality of this?

    December 1, 2011 02:06 am at 2:06 am |
  23. Chris

    So Republicans feel its necessary to make cuts to pay for tax breaks for the middle class – but not a peep in the past 10 years about cuts to offset the Bush tax breaks for the rich.

    December 1, 2011 02:26 am at 2:26 am |
  24. drewood27

    So the Republican offer to ask more from the ultra wealthy is to ask them to pay more "if they feel like it".

    Gee, what a brilliant plan.

    December 1, 2011 02:47 am at 2:47 am |
  25. Larry L

    They [lan to freeze the pay of federal workers – but not the pay of the Congress. Since when did we declare war on federal workers? Are we now supposed to blame federal workers for the mess the Republicans created during the Bush debacle? Did federal workers start the wars? Did federal workers get in bed with Wall Street? Were federal workers chummy with Enron and Haliburton?

    Federal workers do exactly what our government tasked them to do – many dedicate their lives to long and honorable service. Can the Congress say the same thing? How about we pay the Congress what they're worth – absolutely nothing!

    December 1, 2011 02:56 am at 2:56 am |
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