Reid set to offer compromise to extend tax cut

Senate Majority Leader Harry Reid (D-NV) speaks to the media after a caucus meeting with Senate Democrats on Capitol Hill in Washington August 1, 2011.

WASHINGTON (Reuters) - Senate Majority Leader Harry Reid will offer a compromise on Monday to extend a popular payroll tax cut, a fellow Democrat said on Sunday.

Appearing on the "Fox News Sunday" program, Senator Kent Conrad said Reid's proposal would cover the cost of extending the tax cut, set to expire at the end of this month, but he left it up to Reid to provide details on Monday.

The Democratic-controlled Senate last week defeated competing payroll tax cut extension plans by Democrats and Republicans, showing the need for the two sides to find common ground.

Conrad, a Democrat and chairman of the Senate Budget Committee, said Reid called him on Saturday and said he would offer on Monday "a compromise plan to extend the payroll tax.

Conrad said Reid's plan will be a "serious attempt to move this ball forward because we should not have a tax increase on the middle income. That just makes no sense in this economy."

In a pair of Senate votes last Thursday, Republicans and Democrats said no to each other's plans.

Republicans objected to Democratic calls to slap a new tax on those making more than $1 million to cover the projected $110 billion cost of extending the payroll tax cut.

And Democrats rejected the Republican proposal to pay for it by extending a pay freeze on federal workers and reducing the federal work force.

Conrad said Reid's plan would represent a compromise.

While he declined to released any details, Conrad said Reid's proposal would be fully paid for and not increase the nation's record $15 trillion debt.

"It will be paid for, it will be in a way that is credible and serious," the senator said.

(Reporting by Thomas Ferraro; Editing by Paul Simao)