Republicans in House Reject Deal Extending Payroll Tax Cut

Stephen Crowley/The New York Times

Jon-David talks to Congressman Michael Burgess at 5:35P CT TODAY!!!!


By BRIAN KNOWLTON

Published: December 20, 2011

WASHINGTON — House Republicans on Tuesday soundly rejected a bill approved by the Senate that would have extended the payroll taxcut for most Americans beyond the end of the year and allowed millions of unemployed people to continue receiving jobless benefits.

The House vote, which passed 229 to 193, also calls for establishing a negotiating committee so the two chambers can resolve their differences.  Seven Republicans joined Democrats in opposition.

But the Senate has left town for the year, and Democrats say they do not intend to call it back, putting continuation of the tax cut in jeopardy and leaving a shadow over many unemployed Americans as the holidays near.

It was far from clear whether the two sides would be able to bridge the gap by year’s end. If they fail to do so, payroll taxes for 160 million Americans will rise to 6.2 percent, from 4.2 percent, in January, for an average annual increase of roughly $1,000.

Republicans said the two-month extensions provided by the Senate bill left too much uncertainty at a time of deep economic vulnerability and would leave Congress facing the same thorny issues early in the new year. They said it was a deeply inadequate half-measure that represented the old ways of Congress. 

Immediately after the vote, Speaker John A. Boehner released a letter to the president, saying that he agreed with Mr. Obama on the need for a full-year extension of the tax cut and unemployment benefits.

“There are still 11 days before the end of the year, and with so many Americans struggling, there is no reason they should be wasted,” Mr. Boehner wrote. “You have said many times that Congress must do its work before taking vacation.  Because we agree, our negotiators and the House stand ready to work through the holidays.  I ask you to call on the Senate to return to appoint negotiators so that we can provide the American people the economic certainty they need.”

But in a surprise appearance in the White House briefing room immediately after the vote, President Obama called on House Republican leaders to approve the Senate bill, saying that it was the only way forward.  Without such action, the president said, not only would taxes go up and millions of Americans would lose their unemployment benefits, but the economy would suffer as paychecks shrunk.

“Right now, the bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on Jan. 1 — it’s the only one,” Mr. Obama said.

Speaking with somber intensity, Mr. Obama, who had just returned from a ceremony at Andrews Air Base marking the end of the Iraq war, said that the stakes for Americans were high. “This is not poker, this is not a game, this shouldn’t be politics as usual,” he said.

“The recovery is fragile but it is moving in the right direction,” Mr. Obama said, adding that failure to act quickly “could have an effect on the economy as a whole.”

“The clock is ticking, time is running out, and if House Republicans refuse  to vote for the Senate  bill or even allow it to come up for a vote, taxes will go up in 11 days,” the president said.

Rather than have a straight up-or-down vote, the House on Tuesday implemented a procedural maneuver in which it “rejected” the Senate bill while requesting to go to conference with members of that chamber in a single measure, protecting House members from having to actually cast a politically unpopular vote against extending a payroll tax cut.

Before the vote, Representative Jeb Hensarling of Texas, a member of the House Republican leadership, said on CNN that “House Republicans stand ready to work over the holidays, like many other Americans have to do, to get this done.”

Democrats, seeming to feel the political wind at their back, said the other party had missed its best chance to protect the economic interests of the middle class.

The bill that the Senate passed on Saturday, in an 89-to-10 vote, would also prevent a sharp cut in the fees paid to doctors who accept Medicare. Some Republican senators, including Senator Scott P. Brown of Massachusetts and Senator Richard G. Lugar of Indiana, have called on their counterparts in the House to support that vote.

Representative Nancy Pelosi of California, the House Democratic leader, blaming “the extreme Tea Party element of the Republicans in the House,” noted during the floor debate that Republicans had said a two-month extension was too short. “They’ve never wanted a tax cut, and now they’re saying the tax cut for middle-income people is too small,” she said. “So what is it?”

With tempers growing short and pressure rising for a deal, Representative Eric Cantor of Virginia, the House Republican leader, seemed to strike a particularly conciliatory tone.

“We need to come together in a responsible manner to find common ground where we can accomplish everyone’s goal of a year-long payroll tax extension,” Mr. Cantor said during the floor debate. “Mr. Speaker, there is no reason why the House, the Senate and the president cannot spend next two weeks working to get that done. America will be waiting.”

Senate Democrats, however, have said they would not return to the Capitol to negotiate further until the House passed the short-term bill, one that Senator Mitch McConnell of Kentucky, the Republican leader, negotiated and voted for, along with 38 other Republican senators on Saturday.

The House had been planning to vote on the two-month payroll tax bill on Monday night. But after a two-hour meeting of their caucus, House Republican leaders postponed the floor debate and the vote to Tuesday.

During the conference meeting among Republican members, some members expressed concern about effectively voting for a tax increase on the eve of an election year, said some who attended.

The standoff leaves Mr. Boehner ending the year exactly where he began, in the middle of a nasty fiscal fight with Senate Democrats and his conservative freshmen in revolt, making it difficult to find a middle ground between mollifying his conference and coming up with legislation to avert disaster. But Mr. Boehner said repeatedly on Monday that he believed a deal for a one-year extension could still be struck, even with the Senate essentially adjourned for the year and the tax break set to expire on Jan. 1.

“I don’t believe the differences are that significant that we can’t do this for a whole year,” Mr. Boehner said. “Why punt this until the end of February when we can just do this now and get it over with?”

Senator Harry Reid, the Nevada Democrat and majority leader, urged Mr. Boehner to allow an up-or-down vote. ”With millions of Americans struggling to make ends meet, it would be unconscionable for Speaker Boehner to block a bipartisan agreement that would protect middle-class families from the thousand-dollar tax increase looming on January first,” Mr. Reid said in a statement.

Jennifer Steinhauer and Robert Pear contributed reporting.
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