Reid to offer deal on payroll tax extension, senator says

Senate Majority Leader Harry Reid will be unveiling a new proposal to extend a tax cut for American workers, a Democratic ally said Sunday.

Interviewed on “Fox News Sunday,” Sen. Kent Conrad (D-N.D.) said Reid will announce on Monday the details of a plan that would extend a cut in the payroll taxes used to pay for Social Security. Conrad would not reveal the specifics but said “it will be paid for” and will represent a compromise between the dueling plans Republicans and Democrats voted on last week.

A spokesman for Reid (D-Nev.) did not immediately respond to a request for comment. Don Stewart, a spokesman for Minority Leader Mitch McConnell, said the Republican leader didn’t know anything about a new proposal.

“This ‘compromise’ is as big of a surprise to us as it is to everyone else,” Stewart said.

Congress has been split on whether to renew the tax cut, which was part of President Obama’s stimulus package, and if so, how to pay for it. Democrats want to extend the tax cut for employees, also cutting the taxes paid by employers and paying for the proposal by raising taxes on income exceeding $1 million.

Republicans are divided on issue. Republican leaders have said they want to extend the tax cut, although they proposed an alternate ways to pay for it. But many in the rank-and-file argue the tax cut is a gimmick that does little to boost the economy and compromises the Social Security trust fund.

Despite the differences, Congress will “probably” extend the tax cut, along with an extension of unemployment insurance payments for the long-term unemployed, Sen. Tom Coburn, (R-Okla.) said on the show.