Top Democrat Says GOP Will Have To Budge Big Time in Payroll Tax Fight

A key Democrat tasked with helping to negotiate a full-year extension of the payroll tax cut, unemployment benefits, and Medicare physician reimbursements says Republicans will have to move significantly off their December demands or all three will lapse.

“We want to extend the middle class tax cut, we want to extend unemployment insurance, and we want to keep our promise to Medicare beneficiaries that we’re going to pay for their doctors, so they can have access to their physicians,” Rep. Henry Waxman (D-CA) told me in a brief interview off the House floor Tuesday. “But I’m not going to support something to pay for that by cutting Medicare or cutting the middle class. We can reach an agreement on these things, but the Republicans are going to have to move.”Waxman is the top Democrat on the powerful Energy and Commerce Committee, and a Nancy Pelosi ally who will serve on the bipartisan panel that will try to hammer out an agreement in the next several weeks. He’s also an experienced and well regarded deal maker, with allies on both sides of the aisle and in the Democratic base.

“This is a Republican controlled Congress,” Waxman said. “They control the House and they really control the Senate as well, because the Senate can’t move unless they get 60 votes. So they have to decide: do they want to extend these three, tax cuts, and unemployment, and doctors fees, or do they want to let them go down. And if they’re going to insist that we pay for them in an unfair way, I don’t think they have the votes to pass it.”

House Republicans moved a partisan full year extenders package late last year. But the appetite within the conference for doing so was pretty low, and they had to include a variety of extraneous provisions and contentious financing measures that made it a non-starter in the Senate. Waxman says that stuff will have fall out of the final package. Personally, he favors ending tax breaks for oil and gas companies and a surtax on millionaires to pay for these extensions — or, in keeping with past precedent, not paying for them.

But his bottom line is that the incidence of paying for them fall largely on people and business interests that can afford it — which illustrates just how challenging and underestimated Congress first fight of 2012 will be.