Neither the Democrats' nor Republicans' plans for covering the deficit passed the Senate on Thursday.
The Democrats wanted to extend Federak payroll tax cuts on employees, and actually make them a little larger, while also giving a tax break to employers. Republicans wanted to freeze federal worker's pay until 2015 and reduce that workforce by ten percent.
Takeaway Washington correspondent Todd Zwillich said though both plans failed, the failure may be just what is needed to get both sides to reach a compromise — at least on this one issue.
"Most people are in favor of extending this payroll tax cut that everyone in America who gets a paycheck got last year. And they're going to get there eventually," Zwillich said.
Zwillich said there are negotiations underway right now to find a real plan that both sides can support in order to keep these payroll taxes at least as low as they are right now.
"There is a fear here that if they let this tax go back up and everyone starts paying more taxes on their paychecks in the middle of a bad economy, it could hurt the recovery," he said.
An extension of the tax cut, if not an expansion, is expected to be done by the end of the year.