House GOP may consider payroll tax cut bill lacking offsets
Updated: 5:13 p.m. ET
In a major spending policy shift, top House Republicans announced today that the House could consider a bill to extend the 2 percent payroll tax cut for the rest of the year without offsetting the costs by spending cuts elsewhere.
House and Senate negotiators charged with brokering a compromise on the payroll tax cut package have achieved little in negotiations over how to pay for the payroll tax cut, according to aides. With the clock ticking toward the deadline at the end of this month, Speaker John Boehner, Majority Leader Eric Cantor and Majority Whip Kevin McCarthy, for the first time today, opened the door to a back-up plan to prevent a tax increase on middle class Americans.
"Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year," the GOP leaders said in a joint statement. "If Democrats continue to refuse to negotiate in good faith, Republicans may schedule this measure for House consideration later this week pending a conversation with our members.
The leaders said that they would rather the conferees find an agreement, but that "in the face of the Democrats' stonewalling and obstructionism, we are prepared to act to protect small businesses and our economy from the consequences of Washington Democrats' political games."
Just last week, Speaker Boehner told reporters that Republicans would continue to insist that "this spending ought to be offset with reductions in spending elsewhere." Now, the question is whether the House Republican conference, 87 members of whom were elected in November 2010 largely with a mandate to cut the deficit, revolt.
At an expected meeting tomorrow night, House Republican leaders will ask members whether they would support not only extending the tax cut -- the economic benefits of which many Republicans question -- but also if they'd be willing to add to the deficit while they're at it. That's after Boehner at the end of last year accepted a two-month extension of the payroll tax cut, supported by the Senate, over House Republican objections.
If the extension does come to the floor, however, it would be difficult for Democrats to vote no and it could pass on a bipartisan basis -- even though it fails to include unemployment insurance and a doc fix that Democrats count as major priorities. Senate Majority Leader Harry Reid and Minority Leader Nancy Pelosi have repeatedly hammered Republicans for insisting that tax cuts for the middle class be offset, but not tax cuts for the wealthy passed during the George W. Bush Administration.
Pelosi, however, criticized the new GOP tactic of moving only on payroll tax first.
"The Republican plan to decouple the payroll tax jeopardizes both the ability of seniors to see their Medicare doctors and benefits for millions of Americans who lost their jobs. There is no reason all three of these priorities cannot proceed at the same time as both the House and Senate agreed."
One Senior House Democratic aide said that the move is a win for Democrats. "House GOP Leadership could no longer sustain their position on payroll tax cut -- demanding that it be paid for by cuts on middle class, while refusing to ask millionaires to pay a dime."
It would be difficult for Senate Majority Leader Harry Reid not to bring the clean bill up in the Senate, though they will likely still hit Republicans for insisting that unemployment insurance be offset and for not addressing a looming pay cut for doctors who treat Medicare patients.
The announcement was news to Senate Republicans. When asked about it at a press conference today about the move, even payroll tax negotiator Sen. John Barasso, R-Wyo., was surprised and on a different message.
"We're continuing to look for ways to pay for all parts of this in their blocks in paying for every component of the things I think we need to do," Barasso said. He also said he supports offsets that House Republicans have proposed like freezing federal worker pay.
The clean payroll tax bill could come to the floor this week. The House and Senate are scheduled to be on recess for all of next week for the President's Day holiday. When they return, there will only be two days to get a final bill to the President's desk before the tax cut and unemployment insurance expire.
