Last week, the Senate failed for a second time to approve a payroll tax cut extension bill, as both the Democratic (S. 1944) and Republican (S. 1931) proposals failed. Additionally, late last week, House leadership introduced their first version of the legislation (H.R. 3630). The House version would extend the payroll tax cut for another year, extend the current year's 100 percent bonus depreciation incentive aimed at encouraging businesses to make new investments, give the Federal Energy Regulatory Commission authority over the Keystone XL pipeline project, and provide a one percent increase in Medicare physician reimbursement rates rather than the currently scheduled 27 percent cut. In exchange for continuing long-term unemployment benefits for another year, the House has proposed overhauling the program, in part by reducing the maximum number of weeks that jobless benefits are paid.

Although the following outline could change significantly, as it stands now, the House is now expected to vote on the House leadership plan (HR 3630) tomorrow and then, if it passes, send it to the Senate where Senate Leadership could either offer their own version or bring the House version to a vote. Most likely, House and Senate leaders will have until the end of the week to negotiate a compromise which would then allow the House to pass the comprise before adjourning on Friday and have the Senate clear the bill over the weekend or early next week. One additional offset that could be included in a final package includes broadband spectrum legislation that would raise billions of dollars through a spectrum auction, although there are significant differences between the current House and Senate versions.

In addition to the Senate and House plans, Senators Susan Collins (R-ME) and Claire McCaskill (D-MO) released their own bipartisan plan on December 6. Their proposal would extend the current expiring payroll tax cut for one year as well as expand the tax cut to employers. Currently the tax cut applies just to employees. The cost of the tax cut would be offset by repealing some tax breaks for the oil industry and by imposing a two percent income tax surtax on income over $1 million, with an exemption for small businesses. Their plan also includes $35 billion in additional transportation funds, which would be split by providing $25 billion for highway and bridge funding along with $10 billion for states to increase capitalization of their infrastructure banks that leverage private dollars. Their plan also provides $800 million to the Clean Water and Drinking Water State Revolving Loan Funds, to fund water infrastructure projects.

Link: S.1944, S.1931, H.R.3060, Collins-McCaskill Payroll Tax Cut/Infrastructure Bill