Watch Live

Tweet TWEET

Boehner Says House Republicans Want to Extend Payroll-Tax Cut for One Year

House Speaker John Boehner said he and fellow House Republicans oppose Senate legislation to extend through February a payroll tax cut and long-term unemployment benefits and will push to continue the measures through 2012.

Congress should “stop, do our work and extend for one year,” Boehner said on NBC’s “Meet the Press” today. He said a two-month addition creates uncertainty for employers as they budget for 2012. A “reasonable, responsible” compromise could be reached, he said, and suggested a formal conference committee between the House and the Senate to resolve differences between the two chambers.

“We’ve got two weeks to get this done,” he said. The tax cuts expire at the end of this year. “It’s time to do this the right way.”

Boehner’s call for negotiations threw into question the outcome of the payroll-tax debate just a day after the Senate approved a $33 billion, two-month extension on an 89-10 vote. The top two Senate leaders in both parties indicated a willingness to continue discussing a longer-term deal after Boehner made his remarks.

Bipartisan Majority

Senate Majority Leader Harry Reid said Boehner should proceed with the Senate-approved payroll tax measure, “which passed the Senate with an overwhelming majority of Democratic and Republican votes.” Not doing so, he said, could spark a tax increase for workers on Jan. 1.

Later, his spokesman said Reid isn’t opposed to continuing to negotiate for a longer extension if the House first acted on the Senate legislation.

“Senator Reid has been trying to negotiate a yearlong extension of the payroll tax credit with Republicans for weeks,” Adam Jentleson said in an e-mail.

A spokesman for Senate Minority Leader Mitch McConnell said today that the Republican Senate leader thinks the best way to resolve House Republican concerns with the Senate bill is to move immediately to further negotiations with the House.

“The House and the President both want a full-year extension,” said McConnell spokesman Don Stewart. “The best way to resolve the difference between the two-month extension and the full-year bill, and provide certainty for job creators, employees and the long-term unemployed, is through regular order, as the Speaker suggested.”

White House Frustration

White House officials expressed frustration. White House spokesman Dan Pfeiffer issued a statement saying Boehner should “stop playing politics” and push the Senate-passed compromise through the House.

“It’s time House Republicans stop playing politics and get the job done for the American people,” he said in the statement.

Boehner’s comments today followed a 90-minute conference call with Republican lawmakers yesterday during which “the pushback” by the rank and file members “was a lot stronger than the leadership thought” they would encounter, Georgia Representative Jack Kingston said in telephone interview. He predicted the House would vote to appoint negotiators to reconcile the two versions of the legislation.

“A lot of senior members were pretty agitated” by the Senate measure, Kingston said. House Republicans were surprised that bill passed the Senate with 89 votes, he said.

“People were flabbergasted this was all the stand-up Republicans could give us,” he said. “We thought McConnell was hanging out for something stronger.”

Republicans told leaders to get this issue settled correctly or “we will be here over Christmas if that’s what it takes,” he said.

Doctors’ Reimbursements

Members were upset that the Senate measure made no changes to the unemployment insurance program and urged leaders to “really push” to make sure to extend the Medicare reimbursement rate for doctors for a year, he said. The Senate measure would avert a 27 percent drop in Medicare reimbursements for just two months.

Many doctors “are really small businessmen and if they don’t know what the government reimbursement is going to be for the next year” that’s “a huge disadvantage,” he said.

With the House set to return to Washington tomorrow, Republican leaders are studying their options, Laena Fallon, a spokeswoman for House Majority Leader Eric Cantor, a Virginia Republican, said in an e-mail.

House Options

When the House meets tomorrow, it will either vote to amend the Senate-passed measure “so that it is responsible and in line with the needs of hard-working taxpayers and middle class families” or vote to appoint representatives to a House-Senate conference to reconcile differences between the two chambers, she said.

“We owe the middle class, employers and doctors better than a two-month extension,” she said. “Washington is already causing massive uncertainty to those struggling in the Obama economy.”

“If there is a will there is a way,” said William Galston, a senior fellow for governance studies at Brookings Institution, a policy center in Washington. “The bottom line question is whether either party is really willing to let this entire negotiation collapse.”

For Boehner to express his opposition to the Senate bill “that bluntly on national TV is to lay down a marker from which it is not so easy to retreat,” Galston said. “If the House goes down this road, I think there will be a lot of pressure on the Senate Majority Leader to try and resolve this issue.”

Democratic Split

Senate Democratic leaders publicly split over how to handle the dispute.

Senator Charles Schumer of New York, the No. 3 Democratic leader, said Republicans should act on the Senate bill or take political blame for no measure making it into law.

“If House Republicans let taxes go up on the middle class on January 1, it could very well cost them the majority in the House next year,” Schumer said in a statement. “And they will deserve it.”

Hours later, Senator Richard Durbin, the No. 2 Democratic leader, said talks on a compromise must begin.

“America has had its fill this year of repeated political ultimatums from Speaker Boehner,” said Durbin, an Illinois Democrat. “We can and we must negotiate a long-term agreement after the House passes the Senate’s bipartisan agreement.”

Paying for Cuts

Any talks are complicated by disagreement over how to pay for a yearlong payroll-tax cut extension, with Democrats saying they oppose House Republican proposals that include cuts to Medicare.

Democrats said yesterday that debating the issue again in February would only strengthen their hand, while Republicans would be under pressure in an election year to extend the tax cuts though 2012.

Boehner hasn’t spoken to Reid about House members’ concerns about the bill nor does he have any immediate plans to, Boehner spokesman Steel said today. Asked when a decision would be made about whether to amend the bill or ask for a conference, Steel would say only that a decision would be made before the vote.

President Barack Obama said yesterday he was “very pleased” with the Senate deal.

His remarks at the White House after the Senate passed the plan belied months of negotiations on a bigger package that Obama and Democrats wanted and were unable to get: A yearlong extension of the payroll-tax cut along with a surtax on millionaires.

For their part, Republicans have fallen short on efforts to force the permitting of TransCanada Corp. (TRP)’s Keystone XL oil pipeline from Canada to U.S. refineries, or to attach to a separate spending bill limits on family planning funding, environmental regulation and expanded health-care coverage.

Political Gridlock

The last-minute negotiating before lawmakers break for the holidays caps a year in which congressional gridlock brought the nation close to default during a debt-limit standoff and Obama had to settle for less than the so-called grand bargain of $4 trillion in deficit reduction that he once envisioned.

The world’s largest economy lost 8.75 million jobs as a result of the recession that began in December 2007 and ended in June 2009. It has regained 2.46 million in the subsequent recovery. The jobless rate has exceeded 8 percent since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948.

Concern over a European economic slump precipitated by the region’s debt crisis has helped push down yields on U.S. Treasury securities, showing investors are less concerned with the U.S. budget debate. The yield on the benchmark 10-year note dropped to 1.85 percent late on Dec. 16, compared to this year’s closing high of 3.74 percent reached in February.

Treasuries have returned 9.9 percent this year, according to Bank of America Merrill Lynch’s Treasury Master index, headed for the highest gain on a yearly basis since 2008.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.