The good news is, we’ve reached a point on Capitol Hill at which both parties seem eager to extend the payroll tax break for another year, avoiding a tax increase on over 100 million Americans that economists believe would severely hurt the economy.

The bad news is, the parties aren’t even close to agreeing on how best to pay for it, and the clock is ticking.

Democrats have a pretty straightforward financing option: they’ll pay for a payroll tax break benefiting all U.S. workers through a slight surtax on millionaires and billionaires. Yesterday, Republicans presented an alternative.

Senate Republican leaders introduced a bill that would keep the payroll tax rate at its current level for another year. The cost is roughly $120 billion. Senate Republicans would offset most of the cost by freezing the pay of federal employees through 2015 and gradually reducing the federal work force by 10 percent.

In addition, Senate Republican leaders would go after “millionaires and billionaires,” not by raising their taxes but by making them ineligible for unemployment compensation and food stamps and increasing their Medicare premiums.

I guess we should be mildly impressed Republicans didn’t make demands related to the Bush tax rates?

The bulk of the GOP plan is about shifting the burden away from the very wealthy and towards federal workers, who will in turn find their buying power diminished. Republicans are fully comfortable with the notion of sacrifice, just so long as millionaires and billionaires aren’t feeling the pinch.

Also note, part of the Republican approach is built around cutting the federal workforce by 10%, a favorite goal of Mitt Romney. We already know this is a horrible idea, because we’ve seen the effects in practice.

The rest of their financing plan is rather silly. The GOP wants to means-test unemployed aid and food stamps, but there are already income eligibility restrictions in place. Republicans want to create a mechanism that allows wealthy Americans to voluntarily write checks to the Treasury, but that already exists, too. It’s a reminder that the GOP, when given a chance to present a serious policy proposal, can’t quite overcome its instinct for gimmicks and nonsense.

And what about the House? I found this pretty interesting.

During the closed-door meeting, [House Speaker John Boehner (R-Ohio)] and House Majority Leader Eric Cantor (R-Va.) urged rank-and-file members to support the extension, saying it was necessary for a party that historically opposes tax increases, a leadership aide said.

Cantor told members that “taxes are a Republican issue and you aren’t a Republican if you want to raise taxes on struggling families to fund bigger government,” according to a source in the room.

In other words, for all the posturing, GOP leaders don’t want to get tagged with having increased taxes on American workers a month from today.

This should, in theory, give Dems some leverage — Republicans are showing their cards, and they want to make a deal.

Steve Benen

Follow Steve on Twitter @stevebenen. Steve Benen is a producer at MSNBC's The Rachel Maddow Show. He was the principal contributor to the Washington Monthly's Political Animal blog from August 2008 until January 2012.