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Payroll Tax-Cut Negotiators Split Over What to Include in Bill

Members of the U.S. House-Senate negotiating panel appointed to find a way to extend a payroll tax cut through 2012 tussled over whether they should consider including environmental rules and miscellaneous tax breaks.

The panel’s chairman, Representative Dave Camp, insisted at its third public meeting today that the committee consider only those items contained in bills that passed the House and Senate in December. That would mean language to loosen an Environmental Protection Agency proposal on industrial emissions would be within the panel’s scope as it was in a House-passed bill.

Dozens of tax breaks that expired at the end of 2011 and supplemental welfare grants would be off the table. Camp, chairman of the House Ways and Means Committee, said he would keep extraneous issues off the conference committee’s agenda so it can stay focused on extending the two-percentage point payroll tax cut past its Feb. 29 expiration.

“We have so little time to resolve these issues,” said Camp, a Michigan Republican. “If it’s not in the House bill and it’s not in the Senate bill, then it’s not in the scope of this conference.”

That stance may lead to challenges for the committee once it begins discussing how to cover the $100 billion cost of extending through the rest of the year the tax cut, expanded unemployment benefits and Medicare reimbursements to physicians. For instance, it may be difficult to pay for parts of the bill with some of the overseas military operations money no longer needed because of the U.S. withdrawal from Iraq. That provision wasn’t included in the payroll bills last year.

Capital Investments

Democrats have wanted to tap that money and House Speaker John Boehner, an Ohio Republican, said he has heard the “rumor” that some members of his party are open to that idea.

Speaking to reporters after the conference committee’s meeting, Camp wouldn’t discuss how his interpretation of the panel’s scope would apply to provisions that could be used to pay for the bill.

“We haven’t even started talking about those yet,” Camp said. “I’m taking this one step at a time.”

There was broad agreement during the meeting to allow companies to write off the entire cost of their capital investments through 2012, Camp said. Lawmakers also agreed the Temporary Assistance to Needy Families program should be extended.

Industrial Emissions

Still, the lawmakers haven’t resolved the most pressing issues before the committee, Camp said. During the nearly two hours that the panel met today, members were split over whether the payroll package should include language loosening the proposal to regulate some industrial emissions.

Republicans said the rule would hurt jobs while Democrats said it wasn’t related to the payroll tax cut.

“It’s important to keep this” EPA proposal “in context,” said Senate Finance Committee Chairman Max Baucus. “Most of us have been around here long enough to know that sometimes side issues reach an importance that’s disproportionate to the issue at hand. But nevertheless they’re there.”

Baucus and Senator Ben Cardin, a Maryland Democrat, pressed the committee to consider extending the dozens of tax breaks that expired at the end of 2011. In particular, Baucus said the panel should extend the research and development tax credit and a provision for education expenses.

Camp said those tax breaks would be outside the panel’s scope. He said he would be willing to discuss a few, including ones that Baucus mentioned, to see if they might be added. That would drive up the bill’s cost, which would require lawmakers to find additional ways to pay for the payroll package.

As he left the meeting, Baucus said he thought there is room to go beyond the committee’s scope.

“If something comes up that conferees think is fairly important that may not technically be in scope, I think there’s a decent chance we could figure out a way to make it work,” Baucus said.

Expanding the conference’s mandate may require 60 votes in the Senate and the approval by the House Rules Committee.

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