Breaking News

Allergan Files Lawsuit Alleging Pershing, Valeant Violated SEC Rules
Tweet TWEET

House Republicans Have Few Options to Resolve Payroll Tax Fight

House Republicans are fighting President Barack Obama over extending a U.S. payroll tax cut as their public image weakens and his political position improves, a survey suggests.

A CNN poll taken Dec. 16-18 found that, by 50 percent to 31 percent, respondents said they had more confidence in Obama than in congressional Republicans to deal with the major issues facing the country. A March survey gave Obama a 44 percent to 39 percent edge on that question. The share of people who view the Republican Party unfavorably grew to 52 percent from 45 percent in June, according to the poll.

In the payroll tax-cut fight, House Republicans and face party pressure to accept the Senate’s short-term reduction. Democrats are dug in against immediate compromise on a longer extension.

With the two-percentage-point tax cut due to expire Dec. 31, House Speaker John Boehner today repeated his call for the Senate to pass a one-year extension of the payroll tax cut to “provide certainty for American employers.”

‘Only Option’

Obama told Boehner yesterday that the “only option” is to allow a vote on the Senate’s two-month extension to buy time for negotiations on a one-year cut. Senate Republicans, including John McCain of Arizona and Richard Lugar of Indiana, are calling on House Republicans to give up their insistence on a one-year extension now.

Obama will make remarks about the payroll tax cut today at 12:15 p.m. Eastern time in which he “will continue to urge House Republicans to do what’s right for the American people” by voting on the two-month extension, the White House said in a statement. Obama “will be joined by Americans who would see their taxes go up if the House Republicans fail to act,” according to the statement.

House leaders “have to back down,” said Tom Mann, a congressional scholar with the Brookings Institution, a policy center in Washington. “There’s no real possibility of cutting a deal on a one-year extension before the end of the year. It’s foolish to think otherwise.”

2012 Election Issue

A Senate Republican leadership aide said Boehner, an Ohio Republican, will either have to cave in and allow a vote on the Senate legislation or let the two-percentage-point tax cut expire Dec. 31 and hand Democrats an issue they can use in 2012 elections. Democrats have the upper hand politically, said the Republican aide, and Senate Majority Leader Harry Reid, a Nevada Democrat, has little incentive to bring the chamber back from a monthlong recess to negotiate.

Adam Jentleson, a Reid spokesman, reiterated that senators won’t be called back to Washington.

“There are no other options,” Jentleson said. “We are not discussing any alternative strategies.”

Take-home pay for 160 million Americans will decrease in January unless Congress approves an extension of this year’s cut in the payroll tax that funds Social Security. A worker earning $50,000 a year would see take-home pay drop by $1,000 over the year. For those paid biweekly, each paycheck would be $38.46 smaller.

Lawmakers in both parties say they want to extend the tax cut through next year, while disagreeing over how to pay for it. Senate Democrats sought a surtax on millionaires, while House Republicans voted for such measures as freezing the pay of federal civilian workers.

Partisan Battle

Those disagreements exploded into a partisan fight that threatens economic growth and may worsen disapproval ratings for both parties.

Mann said that to resolve the dispute this month, Reid would have to bring the Senate back into session after both parties agreed to leave Washington and return for work Jan. 23. There isn’t much time for both sides to find a way to pay for a one-year extension, he said.

A House Republican leadership aide who wasn’t authorized to speak publicly said one option floated by Republican aides -- though not embraced by party leaders -- is to approve a two- month extension binding the Senate to negotiations in January to set up a Feb. 1 vote on a full-year reduction.

Asked about such an idea yesterday, Boehner said House Republicans are “ready to work” and said Senate Democrats should return “to have that conversation.” An aide to Boehner said after the speaker’s call with Obama that the speaker made clear he’s not budging.

No Fingerprints

Democrats said they were wary of any proposal to set up a conference committee before Congress extends the payroll tax cut for two months.

“You know the old saying in Washington, when you want to kill something and not leave your fingerprints on it, appoint a committee,” said Senator Charles Schumer of New York, his chamber’s third-ranking Democrat.

In an editorial yesterday, the Wall Street Journal called the Republican standoff a “fiasco” and said Boehner may be helping re-elect Obama because the Democratic president gets to look more like a tax-cut proponent than he’s been and they look like obstructionists.

‘Cut Their Losses’

“Republicans would do best to cut their losses and find a way to extend the payroll holiday quickly,” the editorial said.

McCain, Obama’s Republican opponent in the 2008 presidential election, circulated the editorial on Twitter, saying, “WSJ is right on the mark here.”

Former House Speaker Newt Gingrich, seeking the Republican presidential nomination, told Republicans at a breakfast today in Short Pump, Virginia, that “it is disgraceful” that Congress would pass a two-month extension of the payroll tax cut and “leave town having failed to do the job.”

Gingrich said that the episode has been “as bad a process and as bad government as I can remember in my lifetime, and Barack Obama is the primary reason.”

Michael Franc, vice president for government relations at the Heritage Foundation, told reporters in Des Moines, Iowa, yesterday that, while he isn’t trying to “second-guess the Congress,” presidents typically have the upper hand in these types of policy standoffs with lawmakers. The Heritage Foundation is a Washington group that supports limited government.

“It’s coming across like the Democrats want to cut taxes and Republicans don’t,” Franc said. “It looks like Republicans are the Scrooges.”

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net; James Rowley in Washington at jarowley@bloomberg.net

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

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.