Last year lawmakers dragged out the payroll tax cut fight untl the 11th hour in December. It's not clear if they will do so again this month, when a temporary two-month extension expires.
NEW YORK (CNNMoney) -- Despite bipartisan support on Capitol Hill for extending a temporary payroll tax cut for the rest of 2012, lawmakers have yet to close the deal.
The reason? Same ol', same ol'.
With just 28 days left before the current two-month Band-Aid version expires, the sticking point for lawmakers is how to pay for an extension -- the very same reason that tripped them up when they tried to negotiate a full-year extension in December.
Douglas Elmendorf, director of the Congressional Budget Office, told the House Budget Committee on Wednesday that he estimates that extending the payroll tax cut for another 10 months will cost $100 billion.
The payroll tax cut, if extended, would affect 160 million U.S. workers. It would reduce how much they pay into Social Security, thereby increasing their take-home pay. While normally they would have to pay 6.2% on the first $110,100 of their income for this year, the measure would reduce that to 4.2%. So a person making $50,000 would pocket an extra $1,000 a year -- or $83 a month -- as a result.
That reduced 4.2% rate was in effect for all of 2011 but is set to expire by March 1, barring any action by lawmakers.
Not everyone in Congress is in love with the idea of extending the measure. But there seems to be less argument about how doing so could help the economy in the short run.
"Extending the payroll tax cut through the end of the year will increase output and increase employment," Elmendorf told lawmakers.
He didn't offer specific numbers during the hearing. But in a briefing on Tuesday, he estimated that extending the payroll tax cut for 2012 could add 0.25% to the gross domestic product by the end of the year and reduce the unemployment rate by one- to two-tenths of a percent..
A similar economic effect could result from extending the unemployment benefits. Doing so could boost economic growth this year by 0.25% and create 250,000 jobs by the end of 2012, Elmendorf said.
That's because in both cases the money would go largely to people who are likely to spend most if not all of it. That, in turn, can spur demand for products and help bolster employment.
The select group of lawmakers designated to negotiate a final payroll tax cut deal will meet for the third time on Wednesday. There's no telling when they may conclude a deal but one constituency is hoping for some clarity soon.
As they were last year, payroll tax administrators are hoping Congress resolves the issue once and for all, according to Michael O'Toole, senior director of government relations of the American Payroll Association.
"Payroll systems and the federal payroll tax reporting scheme are not set up to accommodate more than one employee Social Security tax rate in a calendar year, let alone within the same quarter," he said.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.96%||3.99%|
|15 yr fixed||3.14%||3.14%|
|30 yr refi||3.98%||4.06%|
|15 yr refi||3.16%||3.21%|
Today's featured rates:
|Latest Report||Next Update|
|Home prices||Aug 28|
|Consumer confidence||Aug 28|
|Manufacturing (ISM)||Sept 4|
|Inflation (CPI)||Sept 14|
|Retail sales||Sept 14|