Speaker John Boehner Says House GOP Plan to Reject Payroll Tax Cut

A payroll tax-cut extension for workers is in jeopardy because of disagreements between leaders of the U.S. Senate and House of Representatives over how to proceed before the tax break expires on Dec. 31.

The House will hold votes tonight to reject a Senate-backed bill that would extend the two-percentage-point payroll tax cut for two months, Speaker John Boehner said today. If the bill doesn’t pass, the House will then appoint members to a conference committee that would work out differences between the House and Senate. Photo: Adam Kiefaber/Flickr

House leaders Monday night delayed their vote on a short-term payroll tax holiday, and in the process aired a rare repudiation of their GOP colleagues in the Senate.

After a spate of bipartisanship last week, the combatants are back in full-throated warfare over President Barack Obama’s payroll tax initiative and other expiring measures, including jobless benefits for almost 1.8 million people who will lose them next month if Congress doesn’t act.

The House will hold votes tonight to reject a Senate-backed bill that would extend the two-percentage-point payroll tax cut for two months, Speaker John Boehner said today. If the bill doesn’t pass, the House will then appoint members to a conference committee that would work out differences between the House and Senate.

“I made it clear to Sen. Reid and to Sen. McConnell that the House was not going to enter into a negotiation until such time as the Senate did its job. We disagree with what the Senate produced,” Boehner said. “They did their job. They produced a bill. The House disagrees with it.”

“The message coming out of our conference tonight is our members want to make sure that we’re here to continue work until Congress passes a year-long extension of the payroll tax holiday,” said House Majority Leader Eric Cantor (R-Va.)., emerging from a closed caucus meeting that lasted more than two hours and was often punctuated by cheers.

“We outright reject the attempt by the Senate to kick the can down for 60 days. It’s an unworkable solution,” Cantor said.

Both sides insist they want to extend the provisions before a Dec. 31 deadline, but that will prove difficult. After overwhelmingly passing a two-month extension Saturday, senators raced for the exits in the belief that the House would see no alternative but to go along. The Senate isn’t scheduled to resume legislative work until Jan. 23.

Senate Majority Leader Harry Reid is showing no interest in a conference committee. The Nevada Democrat forged an agreement last week with Senate Republican leader Mitch McConnell and said today negotiations won’t resume until the House passes that deal.

“Senator McConnell and I negotiated a compromise at Speaker Boehner’s request,” Reid said in a statement. “I will not reopen negotiations until the House follows through and passes this agreement that was negotiated by Republican leaders and supported by 90 percent of the Senate.”

“With millions of Americans struggling to make ends meet, it would be unconscionable for Speaker (John) Boehner to block a bipartisan agreement that would protect middle-class families from the thousand-dollar tax increase looming on January 1st,” he said.

The 2 percentage point tax cut provides about a $1,000 annual tax cut for a typical earner making about $50,000 a year.

Initially, the House Republicans planned to hold a standard vote on a “motion to concur” with the Senate tax cut extension, which is part of a $33 billion package that also prevents unemployment benefits from running out and doctors’ Medicare payments from being slashed 27 percent.

But in a heated meeting of the Rules Committee that determines how votes are held, the motion was changed to a “motion to reject.”

Reid initially pressed for a year-long deal, which would cost more than $200 billion. He moved to a two-month bill after it became clear last week that Democrats and Republicans couldn’t agree on how to pay for a long-term package. Democrats wanted to cover at least part of the bill’s cost by imposing a new tax on income exceeding $1 million while Republicans focused on paying for the measure by reducing the federal workforce and freezing the pay of government employees.

Both parties agreed to raise the guarantee fees that government-backed mortgage companies Fannie Mae (FNMA) and Freddie Mac (FMCC) charge to lenders, which generated enough revenue to extend the payroll tax cut and emergency unemployment benefits for two months.

While Republicans may be able to shift some blame, they are still left in the position of voting down an overwhelmingly bipartisan agreement that guaranteed the tax cut would not expire for at least another two months.

Senate leaders agreed to the two-month plan when they failed to agree on how to pay for the $200 billion full-year extension. Their idea was to get past the immediate deadline and give themselves more time. They were about $100 billion short in selecting ways to offset the costs, sources said, before they settled on the two-month extension. [via Huffington Post, Fox News and Bloomberg]

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