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Reid Threatens to Push a Democrats-Only Payroll Tax Cut Extension

Senate Majority Leader Harry Reid threatened to move his own payroll tax cut extension bill Thursday, as Democrats across the Capitol decried what they said was GOP obstruction, this as the deadline fast approaches for the tax break to expire.

A House-Senate conference met for the third time Thursday morning to try to hammer out a compromise on not only the payroll tax holiday, but also unemployment insurance benefits and a fix to keep Medicare doctors from seeing a cut to their federal reimbursement.

It was always expected there would be disagreement on how to offset the $100 billion measure, with Democrats pushing a surtax on millionaires and Republicans doggedly in opposition. It was that very issue that blew up negotiations last year, leading to a short-term extension which expires February 29.

Reid blasted Republicans for bogging down the payroll tax conversation Thursday morning with a debate about Boiler MACT rules, regulations designed to rein in toxic emissions from boilers that the GOP and some Democrats say are overly-burdensome on small businesses and could kill thousands of American jobs as currently written.

"I want everyone put on notice - we're not going to walk away without some tough votes. If they can't do something, we'll do it," Reid threatened. A senior Senate Democratic leadership aide tells Fox a bill is not yet being crafted, though.

An aide to House Ways and Means Committee Chairman Dave Camp, R-Mich., told Fox's Chad Pergram, "I would not have characterized (the meeting) as 'bogged down'. You had Senate conferees speak in support of Boiler Mact and a few of the Dems criticize it as not being a job creating measure - but there are varying data points that make it clear that if you are spending on regulatory costs and compliance then you don't have those resources to create jobs."

A measure to delay implementation of new Boiler MACT rules out of the EPA was included in a House-passed bill related to the payroll tax cut extension, but the Senate included no such provision in its version. The National Association of Manufacturers, along with a vast assortment of businesses, are pushing members to include a delay in this version of the payroll tax measure.

The conference is designed to hammer out differences, though at the moment, that task seems almost Herculean.

Shortly after Reid's warning, House Minority Leader Nancy Pelosi issued one of her own.

"The clock is ticking on the payroll tax cut," the California Democrat said, adding that she saw no reason to pay for the tax cut or extension of unemployment insurance benefits, though a surcharge on millionaires was the preferred route if an offset had to be found. The leader also suggested, as she has many times, that the savings from not prosecuting the war in Iraq could be used, as well.

The Reid and Pelosi warnings were quickly followed by a mail from the office of House Ways and Means Committee Ranking Democrat Sander Levin - which read, "Families cannot afford a repeat trip toward the brink that House Republicans took them to in December and over and over again last year."

Democrats have made political hay of GOP disagreement on how to deal with the payroll tax holiday, and it's clear they are itching for the opportunity to do so once again.