Payroll Tax Situation Wont Be Resolved Until Next Week

I haven’t yet seen a good scenario for how the stalemate between the House and Senate on the payroll tax extension will play out.

The most common thought was making the rounds yesterday was that the House would give in to the Senate and agree on the Senate-demanded two-month extension but that it would include an agreement by the Senate to go to conference with the House on a full-year extension. That would give the House a fig leaf it could call a victory while all the pundits will say it got hosed.

But no matter what happens, there are three reasons why I’m convinced it won’t occur until next week rather than by this Friday as some are suggesting.

First, members of Congress don’t want to return to Washington before Christmas. Yes, this could be handled without a quorum in either house by the representatives and senators who live close to DC. But there are some members who will insist on being present for the debate so that option may not be possible.

Second, as I’ve reminded CG&G readers a number of times since they said it to me last February, the tea party wing of the House GOP feels strongly that it will get the best deal only if it pushes every negotiation to the very last possible moment. That’s what’s happened on every other budget-related issue this year and there’s no reason to expect that it won’t happen again on the payroll tax extension.

Third, Democrats are not in any hurray to resolve this situation given what appears to be the political beating the GOP is taking on the issue in the polls.

As a result, I’m not expecting this to be settled until next Thursday December 30 or Friday December 31. It will be a pleasant surprise for everyone — especially those who do payroll — if it happens earlier.

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