Congress in Familiar Territory With Shutdown on the Horizon

Senate Majority Leader Harry Reid arrives for a press conference about extending the payroll tax cut. Photo by Chip Somodevilla/Getty Images.

The federal government is again facing the threat of a shutdown because of a partisan divide in Congress. The version of the story this time is that Senate Democrats don’t want to pass the House Republican version of the payroll tax cut because it contains policy riders they disagree with. To force a compromise on the payroll tax cut bill, Senate Majority Leader Harry Reid, D-Nev., is delaying a vote on an approximately $1 trillion spending bill that would keep the government running past Friday.

Wednesday saw no measurable progress on the standoff. Republicans could conceivably leave town for the holidays with a spending bill passed in the House, so they introduced early Thursday morning their own version of the spending bill. If House Republicans can pass that bill Friday, it could jam Democrats, forcing them to either accept the GOP spending bill and payroll tax plan or get neither.

You can read all nine sections of the enormous bill here.

On Wednesday, Senate Democrats met with President Obama at the White House and later floated the idea of dropping a surtax on millionaires to pay for the payroll tax cut. President Obama also called for a short-term spending authorization bill in order to keep the government running, which would neutralize the government shutdown and relieve pressure on Democrats to accept Republican legislation.

As of Thursday morning, there was no news of a way forward.

Jennifer Steinhauer of the New York Times lays out how Wednesday’s gridlock started:

The day began with Mr. Reid sparring with Senator Mitch McConnell of Kentucky, the minority leader, on the Senate floor, with Mr. Reid expressing bafflement over Mr. McConnell’s refusal to let the Senate vote on the House payroll tax bill that passed earlier in the week.

Mr. Reid wants to quickly vote the bill down because while it would extend a cut in Social Security payroll taxes for 160 million workers, it also eases the way for an oil pipeline opposed by environmental groups, blocks certain air pollution rules, freezes the pay of many federal employees through 2013, increases some Medicare premiums, and greatly reduces unemployment benefits and adds a host of new rules for receiving them.

Hanging in the balance are the paychecks of 160 million American workers, who will all see their taxes rise next year if a deal isn’t reached. The long-term unemployed would also suffer if a deal isn’t reached by the end of the year, because the potential payroll tax cut bill would also extend unemployment benefits.

Now that lawmakers have made the spending bill part of the fight, what was a dispute over how to pay for a tax cut that both sides wanted is now a major crisis. Read our guide produced in February over what a government shutdown could mean.

DEBATE NIGHT

In a presidential nominating campaign shaped more by debates than perhaps any to come before, Thursday night’s meeting in Sioux City, Iowa, could provide the seven Republican contenders with their last, best chance to alter the trajectory of the race ahead of next month’s caucuses.

As was the case in the Des Moines debate five days ago, the spotlight will likely shine brightest on front-runners Newt Gingrich and Mitt Romney.

Romney has stepped up his attacks on the former House speaker in recent days, and it will be fascinating to see how far he goes when standing next to Gingrich. In an interview Wednesday with Jan Crawford of CBS News, the former Massachusetts governor was asked if he thought Gingrich was “in the wrong party,” given his recent attack on Romney’s business record.

“Well it depends on the day,” Romney replied. “I just think he’s been unreliable in his support of conservative principles.”

Romney also accused Gingrich for profiting off his Washington connections. “I think Speaker Gingrich has lived in Washington for the last 30 years. He went to Washington to do good and he stayed to do well.”

Romney, whose net worth is somewhere in the ballpark of $200 million, called Gingrich “a wealthy man, a very wealthy man,” adding, “If you have a half-a-million-dollar purchase from Tiffany’s, you’re not a middle-class American.”

For his part, Gingrich seems intent on remaining positive, at least when it comes to his message on the airwaves.

“These are challenging and important times for America. We want and deserve solutions,” Gingrich declares at the start of a television ad being released Thursday in Iowa. “Others seem to be more focused on attacks rather than moving the country forward. That’s up to them.”

Gingrich will certainly be tested by Romney, and others, to back away from his “happy warrior” stance and engage, as he did last weekend when he remarked that the only reason Romney didn’t become a “career politician” was because he lost his 1994 race against Sen. Edward Kennedy.

The other five candidates will also be looking to engage the front-runners in the hopes of peeling away some of their support.

As the Des Moines Register’s Jennifer Jacobs writes, the stakes are high:

For some of these candidates, it may be their last time on the stage as a presidential candidate. For one, it could mark the point where he or she began the serious business of becoming the Republican nominee — and possibly the next president of the United States.

Jacobs doesn’t name names, but Minnesota Rep. Michele Bachmann, Texas Gov. Rick Perry and former Pennsylvania Sen. Rick Santorum all have a lot riding on Iowa, and a disappointing finish for any of them could be the knockout blow to their presidential bids.

Texas Rep. Ron Paul, meanwhile, is riding high in the Iowa polls and would benefit most if Gingrich slides in the next few weeks, so he will likely continue to raise questions about Gingrich’s consistency on conservative principles.

After missing out on last weekend’s debate, Jon Huntsman returns to the stage, although his task is much more targeted at inserting himself into the national conversation rather than the one Iowans will be having over the holidays.

The former Utah governor made an early decision to skip Iowa and focus on New Hampshire, where a new Suffolk University poll has him running third at 13 percent. (Romney leads with 38 percent, followed by Gingrich at 20 percent.)

After a dozen presidential debates, Thursday night’s encounter could be lucky number 13 for one of the candidates, giving the boost he or she needs heading into the New Year.

MEDICARE SHAKEUP

House Budget Committee Chairman Paul Ryan, R-Wis., is teaming up with Sen. Ron Wyden, D-Ore., to keep Medicare intact. The lawmakers unveiled their joint plan, which would let seniors choose between Medicare or a private health care plan, at the Bipartisan Policy Center on Wednesday morning.

The proposal marks a sharp difference from the private health insurance plan that Rep. Ryan backed as part of the House budget earlier this year. Democrats pounced on Ryan’s old plan and accused him of trying to destroy Medicare. Wyden’s sign-off on the new compromise could make it difficult for Democrats to continue that line of attack in the run-up to the 2012 presidential elections.

The New York Times’ Robert Pear has the details:

The proposal would make major structural changes in Medicare and limit the government’s open-ended financial commitment to the program. Under the proposal, known as premium support, Medicare would subsidize premiums charged by private insurers that care for beneficiaries under contract with the government.

Congress would establish an insurance exchange for Medicare beneficiaries. Private plans would compete with the traditional Medicare program and would have to provide benefits of the same or greater value. The federal contribution in each region would be based on the cost of the second-cheapest option, whether that was a private plan or traditional Medicare.

In addition, the growth of Medicare would be capped. In general, spending would not be allowed to increase more than the growth of the economy, plus one percentage point — a slower rate of increase than Medicare has historically experienced. To stay under the limit, Congress could cut payments to providers and suppliers responsible for the overspending and could increase Medicare premiums for high-income beneficiaries, the lawmakers said.

Ryan and Wyden say they do not plan to release specific legislation, citing Congress’ full plate at the moment. In a joint interview with the Washington Post, the duo explained that their goal is to begin a dialogue between Republicans and Democrats:

“We want to demonstrate that there is an emerging consensus developing on how to preserve Medicare. We want to move that consensus forward,” Ryan said. “This program’s got to be reformed to be saved. The country’s at stake.”

Wyden said that adding traditional Medicare to Ryan’s premium support plan combines the best ideas of both parties, creating “the opportunity for progressives and conservatives to come together and address the real challenges” of the federal entitlement program: rising health costs and an aging population.

“There’s a lot to work with here in terms of trying to find common ground,” Wyden said. “This doesn’t end Medicare as we know it. People can go to bed knowing that traditional Medicare will be there for them for all time.”

PBS NewsHour reporter-producer Elizabeth Summers contributed to this report.

ON THE TRAIL

All events listed in Eastern Time.

• President Obama attends a We Can’t Wait event in Washington with Secretary of Labor Hilda Solis at 12 p.m. and will deliver a statement.
• The GOP hopefuls meet for a presidential debate hosted by Fox News and the Republican Party of Iowa in Sioux City at 9 p.m.
• Rick Santorum hosts three Iowa town halls ahead of the debate — in Rockwell City at 9 a.m., Sac City at 12 p.m. and Holstein at 3:30 p.m.
• Rick Perry holds an event in Le Mars, Iowa, at 12 p.m.
• Newt Gingrich holds a meet-and-greet in Fort Dodge, Iowa, at 1 p.m.

All future events can be found on our Political Calendar:

For more political coverage, visit our politics page.

Sign up here to receive the Morning Line in your inbox every morning.