The payroll tax cut extension passed by tooth and nail at the end of 2011 expires at the end of February, and this month's battle to work out the re-extension's logistics looks like it will be just as painful. A 20-member conference committee is hammering out the details, with three hearings scheduled for this week, including one this morning. The committee has less than three weeks to craft a deal and get it to Congress for passage before the President's Day recess. The two parties are fighting over the same territory they did in December—Democrats want a millionaire surtax and want to keep unemployment insurance untouched, Republicans want to freeze federal workers' pay, impose higher premiums on upper-income Medicare beneficiaries and ban millionaires from receiving jobless benefits. As of right now, neither side will budge. If legislators tread the same ground as they did two months ago, we'll see another payroll showdown at the end of the year. Senator Max Baucus told Politico that legislators might look for other options for the payroll tax, “That is, maybe it’s a shorter period of time, not a full 10 months through the rest of this year.”
Chart of the Day
This graph charts the performance of the Euro Stoxx 500 (the blue line) and the S&P 500 (the orange line) over the past year. Although American markets have steadily distanced themselves from the shaky European economy in performance, the correlation between the two markets' growth is unquestionable. Despite the world's efforts to create a buffer between the European economy and the rest of the global economy, they have had limited efficacy, and, when defaults and policy decisions rock the continent, we're going to feel the shocks too.