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Washington D.C. - Congress is entering a crucial period before the Christmas holiday, when it needs to make critical decisions on medicare doctors pay and an extension of the payroll tax holiday.

HEAR Matt Kaye's report HERE>>>12-06 payrolltxmedicare.mp3

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It’s a decisive moment for legislation to extend a 2-percentage point cut in social security taxes.

Democrats and Republicans are divided on how to pay for an extension. But without one, the deduction reverts to 6.2%  from 4.2% on New Year’s Day.

That’s another thousand-dollars a year out of the average worker’s paycheck.

And it would mean less take-home pay for thousands of domestic and many foreign workers in the CNMI and Guam.

The IRS now says Filipino and Korean workers in the Marianas, once treated the same as exempt H2-Visa workers in Guam, must now pay social security and medicare payroll taxes.  That, due to the federalization of the NMI's immigration.

House Speaker John Boehner and Senate Democratic leader Harry Reid were expected to offer competing proposals this week to pay for a tax holiday extension the leaders say must pass before Christmas.

"Like our previous proposal, this scaled-back version will cut taxes for 160-million workers.  This proposal will allow the average family to keep an extra $15-hundred dollars to spend on necessities, next year.”

And in a concession to Republicans, Reid says, a smaller surtax on millionaires, and it would be temporary.

The leaders are also considering a measure to adjust medicare pay to doctors, who face a 30% cut starting  January first, called for under a long-standing rate-setting formula.

Thousands of patients in Guam and the Commonwealth receive Medicare.

Doctors are already dogged by an impending 2% a year Medicare cut in 2013 through 2021 that stems from the failure of Congress’s Supercommittee to come up with a deficit reduction plan.

The American Medical Association’s incoming President says with the added cut, it’s just “one more business risk for physicians already trying to decide whether they can afford to continue seeing medicare patients.”

And the American Hospital Association in a study out in September claimed some 200-thousand hospital-related jobs could be lost to the across-the-board medicare cuts.