Obama and Boehner Increase Pressure Over U.S. Payroll Tax Cut

U.S. lawmakers are close to agreement on a plan to continue a payroll-tax cut for two months and require the Senate to appoint negotiators to discuss a longer-term plan, a Republican congressional aide said.

House Speaker John Boehner found himself increasingly isolated today as President Barack Obama continued to insist on a two-month stopgap agreement and Senate Republican leader Mitch McConnell said the speaker should accept a short-term plan to avoid the Dec. 31 expiration of the tax break.

Boehner, an Ohio Republican, telephoned Obama today to again press for a one-year extension to the two-percentage-point tax cut. Obama said a “faction of House Republicans” was blocking the measure and that he was doing all he could to resolve the impasse.

“How can we not get that done?” the president said at an event on the White House grounds. “I mean, has this place become so dysfunctional that even when people agree to things, we can’t do it?”

McConnell, of Kentucky, weakened Boehner’s hand today by calling on the House Republican leader to pass a short-term bill by year’s end so Congress could return to talks over the tax cut, an oil pipeline and other matters in the Senate measure.

‘Greater Certainty’

Photographer: Joshua Roberts/Bloomberg

U.S. House Speaker John Boehner, a Republican from Ohio, pauses during a news conference at the Capitol in Washington, D.C. Close

U.S. House Speaker John Boehner, a Republican from Ohio, pauses during a news... Read More

Close
Open
Photographer: Joshua Roberts/Bloomberg

U.S. House Speaker John Boehner, a Republican from Ohio, pauses during a news conference at the Capitol in Washington, D.C.

“House Republicans sensibly want greater certainty about the duration of these provisions, while Senate Democrats want more time to negotiate the terms,” McConnell said in a statement. “These goals are not mutually exclusive. We can and should do both.”

Boehner earlier dismissed criticism from fellow Republicans that he should accept a two-month extension of the expiring payroll tax cut to avert political damage to his party.

“Politics will be politics,” Boehner told reporters at a news conference this morning. “If you do the right thing for the right reasons, then the right things will happen. Everybody’s already agreed that the best policy is a one-year extension.”

One House Republican today moved away from that position. Representative Sean Duffy of Wisconsin, a first-term House Republican, said it would be best for the House to pass the Senate’s measure so the tax cut doesn’t lapse. He voted with most Republicans in the chamber to reject the Senate legislation on Dec. 20, and said today that Congress must “rise above the squabbling” to resolve the impasse.

Not ‘Proving a Point’

“Of course, I still believe middle-class families would be better served by the certainty of a one-year payroll tax holiday, but this isn’t about proving a point,” Duffy said in a statement. His northwest Wisconsin district has backed Democratic presidential nominees since 1988.

Republican Senators Richard Lugar of Indiana, Olympia Snowe of Maine, Scott Brown of Massachusetts and John McCain of Arizona have called on Boehner to accept the Senate’s two-month bipartisan deal.

Former House Speaker Newt Gingrich, who is seeking the 2012 Republican presidential nomination, warned yesterday that Republicans could be blamed if the tax cut expires. A Wall Street Journal editorial yesterday called the House Republicans’ fight for a longer-term payroll tax cut a “fiasco” that could help re-elect Obama to the White House in 2012.

Boehner’s comments were an attempt to regain ground after Democrats spent the past several days warning that average middle-income workers could lose about $40 from each paycheck if the tax cut expires. The Ohio Republican told reporters that the two-month extension is unworkable because most businesses file their taxes quarterly.

‘Only Viable Option’

In the phone call today, Boehner encouraged Obama to send members of the White House economic team to Capitol Hill to help lawmakers come to an agreement on a one-year extension, according to an aide to Boehner. Obama repeated to Boehner that he views the Senate version of the legislation as “the only viable option currently on the table,” the White House press office said.

House Democratic leader Nancy Pelosi of California sent a letter to Boehner pressing him to hold a vote on the Senate- passed two-month extension.

“There is no reason why such an extension cannot be on the president’s desk within a few hours of House action given the overwhelming support the Senate has already demonstrated,” Pelosi wrote.

6.2 Percent

Unless Congress acts, the payroll tax for employees will rise to 6.2 percent from the current 4.2 percent in January. The payroll tax funds Social Security. If a deal isn’t reached, emergency unemployment benefits are also set to expire on Dec. 31 and doctors who are reimbursed through Medicare will receive lower payments starting in January.

A survey suggests that House Republicans’ public image has weakened as Obama’s political position improves.

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.

House leaders “have to back down,” Tom Mann, a congressional scholar with the Brookings Institution, a policy center in Washington, said yesterday. “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.”

How to Pay

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.

The issue is gaining traction in the presidential campaign. Former Massachusetts Governor Mitt Romney said yesterday on MSNBC he’d like to see the tax cut extended, while noting “this is not going to turn the economy around.”

Today, Gingrich accused Romney of taking a stance that isn’t aggressive enough.

“If you’re a candidate for president and you’re not prepared to talk about the hottest issue right now which affects every single working American -- there’s a concept called leadership,” Gingrich said. “And people sometimes think that I’m too aggressive, but at least I lead, ok?”

The Senate-passed bill is H.R. 3630.

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

Bloomberg reserves the right to edit or 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.