Baucus, Tester split on payroll tax holiday

Montana's U. S. senators — both Democrats — split on a Democrat-supported proposal to extend a reduction of payroll taxes, set to expire this month.

The extension, originally part of President Barack Obama's American Jobs Act, failed on a 51-49 vote.

Sen. Max Baucus voted for the extension, saying he will continue to fight to extend the tax holiday.

"Middle-class workers and small business owners are the key to growth and job creation, and putting more money back in their pockets with the payroll tax cut helps boost our whole economy, " Baucus said in a release following the vote. "It's a shame we weren't able to come together and pass the payroll tax cut extension for working folks tonight, but I'll keep fighting until we get it done, and I'm confident we will get it done, because we have to. "

Sen. Jon Tester, who voted against the jobs act on Oct. 11, was one of the Democrats voting against the extension. He issued a statement before the vote, giving his reason for voting against it and against a Republican-sponsored payroll tax reduction extension.

"I believe they are gimmicks — designed more for political posturing rather than what Congress really ought to be doing: working together to create jobs on a long-term basis, to create long-term certainty for Montana's businesses, and to cut spending and cut our deficit, " Tester said in the statement.

Baucus also voted against the Republican proposal.

Rep. Denny Rehberg, a Republican challenging Tester in the 2012 Senate race, said he supports extending the holiday, as long as it does not require raising other taxes.

"I've been fighting for a payroll tax holiday for years, because it's an excellent way to let Montana families keep more of their hard-earned money, " he said. "And, like most Montanans, I think we should pay for it by reducing out-of-control spending not raising taxes somewhere else. "

Baucus cited information from the U. S. Treasury Department on how much the tax holiday saved Montanans in 2011. The holiday saved $300 million for 600,000 Montana workers in 2011, and the additional cut proposed under the extension would put $500 million back in the hands of 600,000 Montana workers in 2012, his release said.

Information from the White House indicates it would have cut payroll tax expenses for 30,000 Montana businesses, the release said.

Tester said he supports tax cuts, and "making sure millionaires and corporations pay their fair share, " but he said both proposals voted on Thursday were "written with 30-second political attack ads in mind. That's the wrong approach to solving a serious problem, " he said.

The focus now turns to the House of Representatives, where the Republican leadership is expected to release a payroll tax holiday proposal likely paid for through spending cuts.

The Associated Press reports that House Speaker John Boehner, R-Ohio, said for the first time that renewing the payroll tax cut would boost the lagging economy. Boehner also promised compromise on a renewal of long-term jobless benefits through the end of 2012.

Obama's proposal would cut the Social Security payroll tax from 6.2 percent to 3.1 percent next year and also extend the cut to employers. The $265 billion bill would be paid through a 3.25 percent surtax on income exceeding $1 million.

The bill needed 60 votes under Senate rules, failing with the 51-49 tally. For the first time, a Republican, Susan Collins of Maine, voted to support the millionaires' surcharge.

Democrats and more than two dozen Republicans then voted 78-20 to kill the $120 billion GOP alternative that would have simply extended the existing 2 percentage point payroll tax cut, financed by freezing federal workers' pay through 2015 and reducing the government bureaucracy.

The Democratic plan would give a worker earning $50,000 a more than $1,500 tax cut; the GOP plan would provide a $1,000 tax cut for such an earner. A two-income family making $200,000 would reap a $6,000-plus tax cut under the Democratic plan and a $4,000 tax cut under the GOP version.

Information from The Associated Press was used in this story.