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Wide gulf remains between conferees on payroll tax, other benefits

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WASHINGTON – Talks between Democratic and Republican lawmakers about how to fund the extension of the payroll tax cut beyond this month became tense at several points Tuesday.

The meeting, in the Capitol, was one of several by the conference committee to hash out a final bill to extend the payroll tax cut, provide payments to doctors who treat Medicare patients and extend unemployment benefits.   

While both sides agreed that the “core measures” of extending the temporary measures of last year were “urgent,” there is fierce disagreement about how, if it all, to pay for the measures.

“Our time is short,” Rep. Dave Camp, R-Mich., chairman of the conference committee and the House Ways and Means committee, said, referring to the deadline at the end of the month.

The committee looked at three proposals from the House side that would pay for more than $70 billion of the estimated $160 billion cost. Democrats suggested higher taxes on million-dollar incomes or deficit financing, saying the situation is an emergency.

The committee focused on three measures in the House bill: freezing pay for members of Congress and civilian federal workers, reducing Medicare subsidies to high-income seniors and recouping overpayments to health-care exchange subsidies, when the subsidies go into effect in 2014.

If the federal employee pay freeze is added to the final bill, it would mark the third straight year that the more than 3 million federal employees would have had their pay frozen.

The reduction of Medicare subsidies to high-income beneficiaries would increase the amount that retirees with annual incomes over $80,000 would pay for doctor visits and prescription drugs.

The health-care exchange subsidies relates to the program set up under the health care reform act that offers subsidies to low- and middle-income families. When the subsidies take effect in 2014, if a person or household goes from being eligible for the subsidy at the start of the year but their financial situation improves to the point that they are no longer eligible, they must pay back a portion of the subsidy. The proposed “pay for” would increase the amount to be paid back.

The measures were chosen because they enjoyed previous bipartisan support.

“These are all measures that every member here has voted for in the past,” Rep. Tom Price, R-Ga., said.

But Democrats insisted that the proposals were being “cherry-picked” out of context from their original form, Sen. Max Baucus, D-Mont., vice-chair of the committee and chair of the Senate Finance Committee, said.

Baucus and other Democratic legislators were insistent that the spending cuts being chosen by the Republicans were being taken out of the context of larger deals that included revenue from tax increases.

“We supported these measures as part of much larger package deal,” Rep. Chris Van Hollen, D-Md., said.

Sen. Robert Casey Jr., D-Pa., said that an additional 1 percent surcharge on incomes of over a million dollars would add $100 billion to pay for the proposals and prevent the committee from hitting “seniors and middle-income earners.”

But Camp was adamant that such a proposal was a non-starter. “That measure is beyond the scope of this committee,” because neither the Senate or House bills contained such a provision.

“It was voted down five times before,” Rep. Kevin Brady, R-Texas, said. “Six if you count it in the unanimous rejection of the president’s budget. You can try it a seventh if you like, but we don’t have time for it here.”

Camp pushed back against earlier reports that he felt the Democrats were negotiating in “bad faith.”

“I think that comments by both leaderships from both parties are not helpful,” Camp said. “I think they need to let the conferees do our job.”

The conferees did not vote on any proposals. They plan to hold another meeting, yet to be scheduled.

Reach reporter Frank Bumb at bumbf@shns.com or 202-326-9871. SHFWire stories are free to any news organization that gives the reporter a byline and credits the SHFWire.

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