GOP: Offsetting Cuts Must Cover Payroll Tax Relief

By: David Espo, Associated Press
By: David Espo, Associated Press

Washington, D.C. (AP) - Republican congressional leaders stressed a willingness Wednesday to extend a Social Security payroll tax cut due to expire Dec. 31, setting up a year-end clash with Democrats over how to pay for a provision at the heart of President Barack Obama's jobs program.

"We just think we shouldn't be punishing job creators to pay for it," said Senate Republican leader Mitch McConnell, scorning a Democratic proposal to raise taxes on million-dollar income earners.

Instead, Senate Republicans called for a gradual reduction in the size of the federal bureaucracy, as well as steps to make sure that million-dollar earners don't benefit from unemployment benefits or food stamps. They also recommended raising Medicare premiums for individuals with incomes over $750,000 a year.

House Speaker John Boehner said flatly that any tax cut extension will be offset by cuts elsewhere in the budget to avoid raising federal deficits. Numerous Republican officials noted that Obama had said the same thing was true of the plan he unveiled in a nationally televised speech to Congress in September.

The events in Congress, coupled with Obama's fresh appeal for renewal of the payroll tax cut while speaking Wednesday in Scranton, Pa., indicated that leaders in both parties want to seek a compromise less than a week after Congress' high-profile supercommittee failed to find common ground on a related economic issue, a plan to reduce deficits.

Yet nearly a full year before the 2012 elections, it also appeared that lawmakers in both parties are eager to compete for the political high ground before any compromise can be struck on the payroll tax or an extension of unemployment benefits that Republicans also said they might approve.

In a visit to blue-collar northeastern Pennsylvania, Obama warned of a "massive blow to the economy" if Republicans oppose his call for a renewal of the payroll tax cut approved a year ago as a way to stimulate economic growth.

"Are you going to cut taxes for the middle class and those who are trying to get into the middle class, or are you going to protect massive tax breaks for millionaires and billionaires?" he said, referring to Republicans.

"Are you going to ask a few hundred thousand people who have done very, very well to do their fair share or are you going to raise taxes for hundreds of millions of people across the country?"

Speaking later in New York City, Obama took a more conciliatory tone toward Republicans.

"For the last couple of days Mr. Boehner and Mr. McConnell have both indicated that it probably does make sense not to have taxes go up for middle class families, particularly since they've all taken an oath not to raise taxes," Obama said. "And so it's possible we'll see some additional progress in the next couple of weeks that can continue to help strengthen the economy."

Senate Democrats have set a vote for later in the week to pay for the tax cut renewal by imposing a permanent 3.25 percent surtax on individuals or couples earning more than $1 million a year, a political maneuver designed to cast Republicans as the protectors of the wealthy at a time when unemployment is at 9 percent nationally.

The proposal has no chance of gaining the 60-vote Senate majority needed for approval.

The Senate Republican alternative, unveiled in late afternoon, envisions extending an existing pay freeze for government workers through 2015 - a provision that would apply to lawmakers. It also proposed gradually cutting the government workforce by 10 percent, or 200,000 positions.

Additionally, Republicans recommended taxing away the value of unemployment benefits and denying food stamps to any household with an income of $1 million or more, as well as raising the Medicare premium paid by individuals who earn more than $750,000 a year.

Republicans said their proposal would raise about $221 billion over a decade, covering the cost of a one-year extension of the existing payroll tax cut and leaving $111.5 billion left over for deficit reduction.

"The Democrats can say they just want some people to pay a little bit more to cover this or that dubious proposal," said McConnell, who also noted that there were misgivings inside his party over Obama's proposed tax cut extension.

"Think about that. The Democrats' response to the jobs crisis we're in right now is to raise taxes on those who create jobs. This isn't just counterproductive. It's absurd."

Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid, said the GOP plan as written won't pass. "Now that Republicans have reversed their position on this middle-class tax cut, we look forward to working with them to negotiate a consensus solution," he added.

The extension of unemployment benefits is also included in the jobs program Obama announced in the fall, at a cost of $48.5 billion over a decade.

The overall cost of Obama's plan was $447 billion over 10 years, and his recommendations concerning the payroll tax account for well half the amount.

Under bipartisan legislation Obama signed late last year, the 6.2 percent payroll tax paid by workers on incomes up to $106,800 was cut to 4.2 percent through the end of 2011. The president has proposed reducing that further, to 3.1 percent, for 2012.

In addition, he is asking lawmakers to grant a similar tax break to businesses by halving the 6.2 percent they pay on workers' wages, up to $5 million in payroll.

Those two changes carry a cost of $247.5 billion, according to the White House.

The millionaires' surtax was a late change in the president's proposal, insisted upon by Senate Democrats who balked at some of Obama's initial proposals.

Initially, Obama proposed higher taxes on family incomes over $250,000 and on the oil and gas industry.

The first request troubled Democratic senators from states like New York, New Jersey and California, where large numbers of families would be hit by the increase. The second drew opposition most prominently from Louisiana Sen. Mary Landrieu, whose state is home to numerous oil and gas operations.

The president also proposed higher taxes on hedge fund managers and corporate jet owners.

Those increases also disappeared, although supercommittee Republicans said they would be willing to accept the corporate jet increase as part of a deal that made big cuts in federal spending.

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Associated Press writers Alan Fram and Andrew Taylor contributed to this report.


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  • by Georgia Boy Location: Cairo on Dec 6, 2011 at 03:10 AM
    The last time I looked it took two parties to compromise, each giving up some of what they want. Yet we have one party in the financial situation this country is in that insists on spending more money to get out of it and raising taxes on some while the other says we should cut spending and not raise taxes. We have two parties that won't budge on their beliefs, yet only one is blamed for not compromising. In this case, Congress and the White House seem to have forgotten the part about giving up some of their beliefs. Sure, if Republicans went along with a "permanent tax increase" Democrats would be willing to provide a temporary reduction in payroll taxes. It seems to me if the Democrats expect Republicans or the American people to agree to that they have totally lost their minds.
    • reply
      by Gerry on Dec 8, 2011 at 07:03 AM in reply to Georgia Boy
      Social Security tax is not paid on income above $106,800 annually. Dems are proposing a tax on rich people, i.e., those whose income is above $1,000,000 annually. Republicans oppose taxes on rich people. Republicans oppose tax relief on the first $106,800 of income (often that is ALL of income) in order to preserve lower tax rates for the rich. Republicans know on which side their bread is buttered and it ain't the middle class side.
  • by Glenn Location: Tallahassee on Dec 1, 2011 at 10:13 AM
    The party of no stops compromise again. Common sense tells you that you cut spending -AND- raise revenue. Looks like if no agreement is made then Republicans will be responsible for huge defense cuts due to the trigger mechanism. Well, you want cuts? You'll get cuts alright! How ironic.
    • reply
      by Gerry on Dec 1, 2011 at 10:35 AM in reply to Glenn
      I can post as gerry because gerry means the same thing as anonymous.
      • reply
        by Gerry on Dec 1, 2011 at 04:00 PM in reply to Gerry
        This is not the same Gerry.
        • reply
          by Gerry on Dec 2, 2011 at 04:57 AM in reply to Gerry
          But how are you to know that I am not really gerry,since gerry is actually anonymous?You really don't know,do you?That's why I post as Gerry,so no one will know who I am.
        • reply
          by Gerry on Dec 2, 2011 at 05:52 AM in reply to Gerry
          @ The Gerry at 7:00 PM and 8:52 AM are the same. You have to admire somebody petulant enough to adopt another's handle. There aren't enough combinations of letters and numbers to satisfy him.
        • reply
          by Gerry on Dec 2, 2011 at 11:09 AM in reply to Gerry
          This is the anonymous gerry.
  • by Gerry Location: Tallahassee on Dec 1, 2011 at 08:52 AM
    Obama said the US has no ally more important than Israel. That's because of all Israel has done for the US in its 65 short years of existence. Why is this not news at WCTV?
    • reply
      by Larry on Dec 1, 2011 at 10:10 AM in reply to Gerry
      Probably because Israel has been a huge financial burden to the U.S. taxpayer in keeping it afloat. Plus, Israel has caused the U.S. to have bad relations with the Arab world whereas prior to Israel's creation we had good relations, peace, and everyone got along, including Jews and Arabs.
      • reply
        by Moishe on Dec 1, 2011 at 11:37 AM in reply to Larry
        Our relations with the Arab world have more to do with our pluralistic society than with Israel. If we were to abandon Israel tomorrow do you think attitudes would change? Israel has been a good friend and ally. If not for the United States we would be viewing a rerun of the holocaust.
        • reply
          by Gerry on Dec 1, 2011 at 04:03 PM in reply to Moishe
          What has Israel done for the US? Israel is as important an ally as the UK, example?
        • reply
          by Gerry on Dec 1, 2011 at 10:00 PM in reply to Moishe
          should be for example
  • by Bubba on Dec 1, 2011 at 05:56 AM
    More hypocritical words and actions from the far-right. I don't recall the cons worrying about how to pay for the Bush tax cuts, the Iraq and Afghanistan wars, Medicaid drug benefit, TARP or much of anything else for that matter. It is the conservatives who should be ashamed, and if their actions are the "standard" by which freedom loving people are supposed to unite then we have truly failed as a nation. Most of them belong behind bars for their crimes against the American people. Vote the scum out of office, and then we will send them to prison.
    • reply
      by mc on Dec 1, 2011 at 08:26 AM in reply to Bubba
      Hey Bubba, you the Govt. don't pay for tax cuts it's not their money . Tax cuts are those earning their money keeping it.Most on the right dia=sagreed with TARP,The Wars are justified I have family serving right now in the military and they all feel it was better to fight the enemy there instead of here. And the cost of the war action is a drop in the bucket compared to Obama care and all of the entitlement spending.
      • reply
        by Gerry on Dec 1, 2011 at 11:39 AM in reply to mc
        The unpaid for war in Iraq was justified? 4,000 US soldiers dead. Hundreds of thousands? of Iraqis dead. You are a keen critical thinker. You're not one to parrot the company line.
        • reply
          by GV on Dec 1, 2011 at 12:11 PM in reply to Gerry
          Gerry,on one post you go on a rambling babbling rant about how many people are involved in government spending,but yet you still come on here a say Bush spent the money on the wars.Did Bush not have to have them same people involved when he went to war?Spease explain that to me,because it just doesn't make any since,gerry.
        • reply
          by Gerry on Dec 1, 2011 at 10:04 PM in reply to Gerry
          @GV Your post is incoherent.
        • reply
          by GV on Dec 2, 2011 at 11:09 AM in reply to Gerry
          That's what I thought,Gerry.
  • by Gerry Location: Tallahassee on Dec 1, 2011 at 05:44 AM
    The last number I heard floated about was .7% of income over $1,000,000 annually. For example, if you earn $2,000,000 annually, you would owe an additional $7,000. The rich, assuming those with an annual income of over $1,000,000 are rich or well on their way to rich, cannot afford to pay $7,000 or any other amount because they are creating jobs with that money. There are plenty of good jobs in this country going begging. If you think extra tax is fair, you are a socialist. On each extra dollar of income rich people cannot afford to pay an additional 3/4 of a cent, to close the deficit or pay for unemployment benefits or pay for the empire's army or whatever. If you think the rich are taxed too little, you are undoubtedly waiting for your government handout and planning to occupy Wall St or some gated community.
    • reply
      by mc on Dec 1, 2011 at 08:21 AM in reply to Gerry
      You close the deficit bt stopping spending period you don't need to raise taxes on any one. Yes if you believe in taxing the rich to redistribute it to those who did not earn it that is a Marxist ideal. Whats fair is everyone paying the same amount percentage wise. There are too many ppeople with no skin in the game wanting more of other peoples money. As far as thinking the rich are taxed too little making you a canadate for the occupy movement , thats what they say in their own words every night on the news.
      • reply
        by Gerry on Dec 1, 2011 at 10:16 AM in reply to mc
        I'd guess what you know about Marxism you learned from Glenn Beck. Have you ever read Das Kapital? What's fair about somebody who works hard to earn $30,000 per year paying 10% in tax and somebody who inherits $1 million and invests it at 3% also paying 10% on the interest income?
        • reply
          by mc on Dec 1, 2011 at 11:47 AM in reply to Gerry
          Not in my personal library, but it is probably in yours. 10% across the board is the fair thing.
        • reply
          by Gerry on Dec 1, 2011 at 04:11 PM in reply to Gerry
          @mc Where did you learn about Marxism and socialism? From FoxNews? I thought sharing with the less fortunate was an ideal of the Salvation Army or pretty much any church you can name.
      • reply
        by mc on Dec 2, 2011 at 02:58 AM in reply to mc
        To Gerry ,Thats right helping the less fortunate is supposed to be from the churches where it is done from the goodness and faith of the heart. Not from govt. ,Govt. does it by taking and purposely creating a dependency class. Taking through taxation and redistributing to those who have need, spreading the wealth around. Christian ideals teach that we help the poor to stand on their own two feet and help the elderly voluntarily to get to a place where their lives are better. The Govt. solution of taxing the higer incomes and giving it to the poor differs in that under entitlement programs no one is ever elevated or encouraged to to better , the opposite is what is taught to be dependant on Govt. for your living and never improving on ones standard of living . Thats how we get generational welfare where no one has supported themselves for two or three generations. I know families that haven't had a job between them for three generations. Always just above poverty and no ambition to change. The Church helps to give hope to do better. The Govt. redistributes to create dependency so people will keep voting a certain way to keep one party in power, thas not compassion but true greed for their own political career.
  • by mc on Dec 1, 2011 at 03:00 AM
    Class warfare and class envy that's all Obama and the democrats have to offer. Raising taxes on the higest income earners never have created jobs. . Plus taxing oil and gas companies just raises the price of utilities and gasoline. Which the poor have a harder time paying so that will just hurt the poor. A lot of people love the idea of sticking it to the rich because they look at the rich and think that they somehow got rich by taking what little money they do have. How is that possible? Who forces you to open your walets and give your money to anyone who's rich , President Obama should be ashamed , he's trying to divide this country the haves and the have nots against each other ,He's doing this on purpose to take attention to his abismal record which he don't dare run on. In the New York Times he's quoted as saying he is not even going to try to reach out to working families for his campain instead just keeps on offering up class envy designed to stir up the entitlement, occupy crowd
    • reply
      by Jane on Dec 1, 2011 at 05:58 AM in reply to mc
      Got your talking points fresh off the press. Not an original thought among the totality of zombie republicans.
      • reply
        by mc on Dec 1, 2011 at 08:15 AM in reply to Jane
        I stick with what is true. Most in the press are in favour of taxing the rich more I'm in disagreement with them. Who has forced you to give your money to the rich?
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