Updated: At 12:30 PM after the senators' formal announcement of their proposal
WASHINGTON • An absence of bipartisanship in Congress thus far has blocked efforts to extend the expiring Social Security payroll tax cut or advance pro-jobs legislation amid deep differences over how to cover the costs.
As the negotiating endgame for the year approaches, Sens. Claire McCaskill and Susan Collins today offered a bipartisan plan today that they hope can bridge a philosophical gulf over taxation and prevent raising taxes on the average family by $1,000 annually starting in January.
The proposal by McCaskill, D-Mo., and Collins, R-Maine, would extend the year-old payroll tax cut through 2012, paying for it with a 2 percent surtax on taxpayers earning more than $1 million a year and repealing unspecified tax breaks for the five major oil companies.
Their legislation would protect small business owners who pay taxes individually, a key provision that seeks to address concerns that increasing taxes on high-income earners would negatively impact "job-creators."
The senators said at a news conference that they hope their plan emerges as a viable alternative during intense jockeying in coming days.
"From time to time, Susan and I ran into each other in the hall and say 'this place is driving me crazy'. Sometimes she says it, sometimes I say it," McCaskill said.
"This is basically putting a stake in the ground and saying this place can still work," she said.
A key aim of their plan is to attract GOP backers, and in exchange for supporting the tax hikes the senators propose to delay an Environmental Protection Agency regulation to toughen air pollution rules, a new Republicans in particular find onerous.
The EPA said recently that it would give industry more flexibility to implement the new directive, but the McCaskill-Collins proposal would delay the so-called Boiler MACT rule for an additional 15 months.
Their proposal also includes job-creating provisions, raising enough money to provide an additional $25 billion for highways and bridges and $800 million more for clean water programs.
The senators have not yet submitted their legislation for the required Congressional Budget Office analysis and therefore declined to estimate how much money the surtax and the end of certain oil subsidies would bring in.
Their plan will be competing with several others as Congress rushes to complete a piece of business that would impact an estimated 160 million Americans.
Senate Minority Leader Mitch McConnell, R-Ken., this morning spoke to the divisive issue of tax increases to pay for the extension. While not addressing the McCaskill-Collins plan directly, he accused Democrats of engaging in "cheap political theater."
"But for now, it's perfectly clear that the path to an accomplishment on this issue does not run through tax hikes," McConnell said.
Collins, one of the most liberal Republicans in the Senate, said she and McCaskill are hoping to show that the two-party system can still function in Congress, which was called into doubt again most recently with the failure of the 12-member "supercommittee" to reach consensus to start trimming the national debt.
"Every weekend when I go back to Maine I hear the same refrain. People tell me they're tired of the partisan gridlock in Washington," she said.
Echoed McCaskill: "Part of this is whether you want to get to a compromise or whether you want to score political points."
McCaskill has looked to oil subsidies as a revenue producer before. Last spring, during high-stakes budget talks, she offered legislation to rescind more than $20 billion in tax breaks from BP, Exxon, Shell, Chevron and ConocoPhillips.
"We're going to be optimistic," she said today, "because we have no other choice."
