Senate Democrats are under pressure to adopt the payroll tax cut bill House Republicans passed last night — or something very close to it. President Obama has threatened to veto it, and Senate Majority Leader Harry Reid (D-NV) has declared it dead on arrival in his chamber.
But as explained here and here the issue has now become tied up with funding the government for the rest of the fiscal year. If appropriations legislation doesn’t pass by Friday night, the government will shut down. And even if Congress manages to avoid that mishap, the current payroll tax cut — along with extended unemployment benefits and a patch to prevent Medicare doctors from experiencing a big pay cut — all expire on January 1. Hamstrung by the GOP’s filibuster powers, Dems can’t pass an alternative version without GOP help, and so the heat is on them to cave.
Despite all that, here’s one reason Democrats might hold firm:Adopting the GOP bill would result in higher out of pocket costs for middle class seniors on Medicare — a GOP measure adopted in lieu of raising income taxes on millionaires. That would both weaken the program, increase expenses for seniors, and muddle Dems’ election year message that they’re protecting entitlements from a conservative onslaught.
I asked House Speaker John Boehner about this at a Tuesday evening press conference: is there a contradiction between the GOP’s opposition to raising taxes on annual income over $1 million, and their support for charging significantly less affluent seniors more for Medicare.
“We believe that looking at the problems in Medicare that wealthy seniors ought to pay a higher portion of their Medicare premiums. That’s what the bill does. I think it makes common sense. It’s something that’s been discussed in every [negotiation] this year whether it was Majority Leader Cantor in the Biden group, my discussions with the President, my discussions with Senate Democrats. It’s not an issue that there’s much disagreement, if any, on between the two parties.”
The GOP’s broader plan to phase out the existing Medicare program altogether is structured to at least temporarily shield current seniors from the cuts — but the higher premiums Republicans just passed would go into effect in 2017 for all beneficiaries.
Some Democrats — even House Minority Leader Nancy Pelosi — have signed off on measures like this in the past, but only in the context of broad legislation to tame budget deficits that includes higher taxes on wealthy earners. These higher premiums, instead, would be used to provide aide to current workers and the unemployed. They would apply to people making above $80,000 a year, and rise in significant increments for people making more than $100,000, $150,000, and $200,000, in Medicare Parts B (outpatient care) and D (prescription drugs).
That stands in pretty sharp contrast to the Dem idea that people making over $1 million should foot the bill with a small tax on their second million dollars in income.