Congress shifts to payroll tax holiday, unemployment benefits

With the supercommittee in the rearview mirror, Congress returns to session this week to battle on new fronts: a possible extension of the payroll tax holiday and unemployment benefits that expire at year’s end that President Obama wants renewed.

Failure to extend the payroll tax break would result in an average $1,000 tax hike for working Americans on Jan. 1, an outcome both Republicans and Democrats hope to avoid.

The Senate will vote on the proposal this week, but it is likely to fail in the face of GOP opposition. Republicans have been fighting the Democrats’ strategy of paying for Obama’s jobs proposals with a surtax on millionaires. Congress will likely consider other ways to pay for the estimated $115-billion cost in the weeks ahead.

Facing a more difficult political climb, though, is an extension of long-term unemployment benefits into 2012.

Despite the nation’s 9% jobless rate, Republicans have grown increasingly uneasy with providing additional unemployment benefits beyond the 26 weeks most states offer.

More than 2 million jobless Americans will exhaust those benefits in the early weeks of the new year. The federal government has been supplementing the states to provide up to 99 weeks of benefits. Congress will need to devise a way to pay for the estimated $55-billion cost of the extra aid that will draw GOP support without alienating Democrats.

The GOP-led House this week will continue making its way through its anti-regulation agenda, which Republicans promote as a key flank to their jobs plan.

The House will also continue to advance legislation pleasing its conservative base, including a vote on a measure that would end government financing of presidential campaigns and party conventions.

In the Senate this week, lawmakers will make their way through the annual Defense authorization bill for fiscal 2012. It includes a long list of defense policy provisions – including those regarding treatment of detainees at the military facility at Guantanamo Bay, Cuba.

With three weeks to go before the federal government again runs out of money, Congress will also be preoccupied with compiling a spending proposal to avert a government shutdown in the days before Christmas.

Republicans have been increasingly uneasy with the level of spending that had been agreed to as part of the summer debt ceiling deal, and it is unclear if they will fight to reduce spending in this next round of budget battles.

While the supercommittee may have ended in failure, unable to achieve its deficit-reduction goal, several members from the bipartisan panel are taking their budget strategies on the road.

Sen. Rob Portman (R-Ohio) delivers an address Monday at the American Enterprise Institute and Sen. Patrick J. Toomey (R-Pa.) has an talk scheduled later this week at the conservative Heritage Foundation.

The supercommittee co-chair, Sen. Patty Murray (D-Wash.), wrote in a Seattle Times op-ed that she plans to continue her efforts. Hers was among several op-eds this weekend from panel members assessing fallout after the committee’s failure.

“This is not the end of a process — it is the beginning of one,” Murray said.

Talk on the Hill is that the gang of six bipartisan senators who were trying to devise a deficit-reduction strategy earlier this year may regroup as a larger gang to pick up where the supercommittee left off.

The Capitol Christmas Tree arrived Monday -- a 65-foot Sierra white fir from California’s Stanislaus National Forest – soon to be decorated with 3,000 handcrafted ornaments for this year’s theme “California Shines.”

lmascaro@tribune.com