Dems Consider Dropping Demands As Republicans Risk A Shutdown

December 14, 2011 11:59 am

If it weren’t for the filibuster, Democrats would have the GOP neatly over a barrel. But Republicans believe they’ve regained the upper hand — and two developments suggest they’re right.

Senate Democrats are now considering dropping their demand that a payroll tax holiday for workers be offset by imposing a small surtax on millionaires, according to Democratic aides — resigning themselves to the fact that Republicans won’t lift their filibuster if the surtax stands.

That’d leave a substantial funding hole in the bill, and it’s unclear what would fill it. One option being considered is having mortgage giants Fannie Mae and Freddie Mac charge lenders higher fees — a version of this measure is already in the House-passed payroll tax cut bill.But they have to make a decision soon. Having tied the issue to funding for the federal government, which is set to run out Monday, a significant delay would risk a government shutdown. In a bid to force the Democrats’ hand, House Republicans opted Wednesday not to move ahead with a short term measure to avoid a shutdown, and are instead considering moving ahead with a longer-term “megabus” appropriations bill, hashed out in bipartisan negotiations. If it passes, Republicans can scatter to the four winds, and leave Senate Dems with a choice between passing everything the GOP wants, poison pills and all, and allowing the government to shut down and the payroll tax cut to expire.

But it’s unclear whether Republicans can advance the appropriations without Democratic help. Many Republicans oppose the funding bills because they don’t slash federal programs deeply enough. If it fails Friday, Congress will have precious little time to pass a short-term measure to prevent a shutdown. Indeed, the Obama administration is already prepping agencies for the possibility that the government won’t be open on for business on Monday.

We’ve been here before: another cluster on Capitol Hill. Just over 48 hours to go this time.

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