The details of the payroll tax reduction, the chances it’ll be extended and how it’ll be paid for.
The details of the payroll tax reduction, the chances it’ll be extended and how it’ll be paid for. - 

Adriene Hill: Many say the budget fight is more politics than policy, but there's another battle coming sooner. That's over an extension of the payroll tax holiday; it's set to expire at the end of February.

For more, we go to Fortune Magazine's Allan Sloan. Good morning Allan.

Allan Sloan: Good morning, Adriene.

Hill: So what is going to happen here?

Sloan: Well, there's going to be a whole lot more yelling and screaming and threatening and posturing, and then at the last minute, they'll extend the tax holiday five seconds before they have to.

Hill: Which gives us lots to write about, I guess.

Sloan: Well, that's the bright side.

Hill: How are they going to pay for this extension?

Sloan: In some sort of nonsensical way that makes no sense to anybody outside of Washington who doesn't speak budget math. Now, the current holiday, you'll be glad to know -- the one that expires at the end of the month -- was paid for by increasing the fees that Fannie Mae and Freddie Mac are supposed to charge on new mortgages beginning later this year.

Hill: What do these fees that Freddie and Fannie are paying have to do with Social Security?

Sloan: Well they have nothing to do with Social Security. Except that Social Security is part of the government, right?

Hill: Right.

Sloan: Fannie and Freddie are part of the government.

Hill: OK.

Sloan: The Congressional Budget Office did a calculation that of all these fees to Fannie and Freddie are the same thing as having $35 billion on hand now. The Social Security holiday for the two months cost $35 billion. So $35 billion left from Social Security, $35 billion is coming into Fannie and Freddie, and it balances. I think even people who are not budget geeks are supposed to understand this, though I'm not sure why.

Hill: I think my head has exploded with this budget math.

Sloan: Well, it could be worse. I could have given you the real version instead of the simplified version, and if you really want an explosion, I'll be glad explain that all to you offline.

Hill: Fortune Magazine's Allan Sloan. Thanks.

Sloan: You're welcome, Adriene.

Follow Adriene Hill at @adrienehill