Dems Plot Payroll Tax Cut End Game

After a few hours of thought, Democrats have decided the GOP’s blink on the payroll tax cut is an unvarnished good, not some devious trick.

Republicans have all but agreed to renew the payroll tax cut through the end of the year without paying for it — a huge tactical swing for them. But they’re still insisting that the other expiring measures — extended unemployment insurance (UI), and Medicare physician reimbursements (the “doc fix”) — are somehow offset with cuts elsewhere.

Having taken the most politically important, and most costly item off the table, are Republicans in the driver’s seat in negotiations over extending the other two items? Not necessarily.

A senior Senate Dem aide explains how Democrats might well proceed from here.“We might amend it [the unpaid-for payroll tax cut] with UI and doc fix over here and…the amends would be hard for Republicans to vote against, because we have worked with Republicans to find pay-fors for those pieces that are attractive to them.”

The doc fix and UI extensions cost together about $60 billion — Dems think they can cover that cost over 10 years in ways that Republicans will have to accept. If that’s correct, the whole saga could end with a quick ping pong game between the House and the Senate.

That is, unless Senate Republicans want to threaten the whole package by demanding more partisan financing provisions. But no GOP leader has been more sensitive to the political dangers of threatening this package than Senate Minority Leader Mitch McConnell — and there’s no reason to think he’d want to up the brinkmanship this time around.