House GOP Rejects 2-month Payroll Tax Cut

By: Andrew Taylor, Associated Press
By: Andrew Taylor, Associated Press

"Now let's be clear," Obama said in a surprise appearance in the White House briefing room. "The bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on January 1st. The only one."

Washington, D.C. (AP) - The House Tuesday rejected legislation to extend a payroll tax cut and jobless benefits for two months, drawing a swift rebuke from President Barack Obama that Republicans were threatening higher taxes on 160 million workers on Jan. 1.

Obama, in an appearance in the White House briefing room after the House vote, said the two-month compromise is the only way to stop payroll taxes from going up by two percentage points.

"Now let's be clear," Obama said in a surprise appearance in the White House briefing room. "The bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on January 1st. The only one."

Obama said failure to pass the Senate version of the payroll tax cut extension could endanger the U.S. economic recovery, which he described as "fragile but moving in the right direction."

House Republicans controlling the chamber want instead immediate negotiations with the Senate on a year-long plan. But the Senate's top Democrat on Tuesday again ruled out talks until the House passes the stopgap measure.

"President Obama needs to call on Senate Democrats to go back into session ... and resolve this bill as soon as possible," said House Speaker Boehner, R-Ohio. "I need the president to help out."

If Congress doesn't break the stalemate and pass a bill by the end of the year, payroll taxes will go up by almost $20 a week for a worker making a $50,000 salary. Almost 2 million people could lose unemployment benefits as well, and doctors would bear big cuts in Medicare payments.

The House vote, 229-193, kicks the measure back to the Senate, where the bipartisan two-month measure passed on Saturday by a sweeping 89-10 vote. The Senate then promptly left Washington for the holidays. Senate Majority Leader Harry Reid, D-Nev., says he won't allow bargaining until the House approves the Senate's short-term measure.

"I have been trying to negotiate a yearlong extension with Republicans for weeks, and I am happy to continue doing so as soon as the House of Representatives passes the bipartisan compromise to protect middle-class families, but not before then," Reid said.

The House vote caps a partisan debate on Obama's jobs agenda, which has featured numerous campaign-style appearances but little real bipartisan negotiation, other than Senate talks last week that produced the two-month extension.

The Senate's short-term, lowest-common-denominator approach would renew a 2 percentage point cut in the Social Security payroll tax, plus jobless benefits averaging about $300 a week for the long-term unemployed, and would prevent a 27 percent cut in Medicare payments to doctors. The two-month, $33 billion cost would be financed by a 0.10 percentage point hike in home loan guarantee fees charged by mortgage giants Fannie Mae and Freddie Mac, which the administration says would raise the monthly payment on a typical $210,000 loan by about $15 a month.

The House passed a separate plan last week that would have extended the payroll tax cut for one year. But that version also contained spending cuts opposed by Democrats and tighter rules for jobless benefits.

Both the House and Senate bills included a provision designed to force Obama to make a decision on construction of the controversial Keystone XL pipeline, which would deliver up to 700,000 barrels of oil daily from tar sands in Alberta, Canada, to refineries in Texas. The provision requires him to issue the needed permit unless he declares the pipeline would not serve the national interest.

Democrats and the White House had reversed course and accepted GOP demands on Keystone, which contributed to sweeping Senate GOP support for the two-month measure. The White House signaled that Obama would block the project.

Until this weekend, it was assumed that Boehner had signed off on the Senate measure. After all, it was agreed to by Boehner's trusted confidante, Senate GOP Leader Mitch McConnell of Kentucky. Boehner declined on several occasions Friday to reject the idea.

But rank-and-file House Republicans erupted in frustration at the Senate legislation, which drops changes to the unemployment insurance system pressed by conservatives, a freeze in the salaries of federal workers and cuts to President Barack Obama's health care law.

Also driving their frustration was that the Senate, as it so often does, appeared intent on leaving the House holding the bag - pressuring House lawmakers to go along with its plan. Tuesday's vote technically puts the onus back on the Senate - but also invites a full-blown battle with Obama, whose poll numbers have inched up during the battling over his jobs initiative.

Both sides were eager to position themselves as the strongest advocates of the payroll tax cut, with House Republicans accusing the Senate of lollygagging on vacation and Senate Democrats countering that the House was seeking a partisan battle rather than taking the obvious route of approving the stopgap bill to buy more time for negotiations.

"If you say you want to do this for a year, put your vote where your rhetoric is," said Rep. Jeb Hensarling of Texas, a member of the House GOP leadership. "If you're not willing to work over the holidays, admit to the American people that you're not willing to work over the holidays."

"Right now Americans want two things from their Congress: middle class tax relief and compromise," said Rep. Steve Israel of New York, chairman of the House Democrats' fundraising committee. "House Republican partisanship failed on both counts."

A lapse of the tax cut means that about $2.5 billion a week more would be withheld from paychecks, though the money could be returned retroactively to taxpayers.

Payroll processors say the two-month Senate version is too complicated. It extends the tax cut, which lowers the Social Security tax to 4.2 percent from 6.2 percent, for only two months. And it limits the lower rate to wages up to $18,350 through Feb. 29. Wages above that amount would be taxed at the old 6.2 percent rate.

The wage limit is meant to make sure upper-income taxpayers don't benefit more than others if the rate goes reverts to 6.2 percent March 1. The Social Security tax applies only to the first $110,100 in annual wages. Without a wage limit, high earners could pay the lower rate on a big chunk - perhaps all - of their Social Security tax obligation. Others would end up paying the higher rate on most of their earnings.

Payroll companies say it would be difficult to adjust their computer systems to reflect the differing time periods and income levels on short notice.

"While any short-term extension is bound to create some administrative complications, it is feasible to implement the bipartisan Senate bill," said a Treasury Department statement. "Any such complications will be outweighed by the economic benefits of ensuring that taxes do not go up on 160 million Americans starting on January 1st."

The annual "fix" to Medicare fees has lapsed many times before.

Medicare announced Tuesday that, as it has in the past when doctors' reimbursements have been cut through congressional inaction, it would withhold physician payments for two weeks in January to avoid passing on a 27 percent cut in Medicare fees. The hope is that the problem gets fixed by then.


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  • by Anonymous on Dec 21, 2011 at 02:27 PM
    Republicans want to extend the tax cuts twelve months while the Democrats want to extend the tax cuts two months end enjoy their holiday break. Hell, a couple of months ago Obama wanted NO tax cuts.
  • by Anonymous on Dec 21, 2011 at 08:35 AM
    "the people of this country are beginning to wonder about the body on the other side of this Capitol and are wondering what the (GOP) leader over there has against the middle class of this country.”
    • reply
      by Anonymous on Dec 21, 2011 at 03:36 PM in reply to Anonymous
      It's not entirely the GOP's fault. The GOP wants to extend it though 2012, not just for 2 months. The DEMS don't want this because they want to keep passing small extensions making it seem like they are continually cutting taxes. The DEMS don't even want to talk about it and Obama doesn't seem to care - until now because he realizes that he might not be able to leave Washington for vacation. Obama should be working the phones(like the Presidents before him) but I guess I know better than to expect him to act like a leader.
  • by Gerry Location: Tallahassee on Dec 21, 2011 at 07:12 AM
    The Senate thought it had a deal. Hence the 89-10 vote. Even Marco Rubio was among the 89. Senate roll call #232 on 12/17/11. What kind of legislation receives 89 votes in the Senate in these divided times? Then Tea Party cretins in the House threw a tantrum. Now withholding taxes will rise on January 1, and unemployment benefits won't be extended. It doesn't matter who gets hurt, the important thing is to assure that Obama is a 1-term Prez. It's not okay to raise income taxes on those making $1 million or more, but it's okay to raise payroll taxes on the working class. Merry Xmas to all!!!
    • reply
      by conserrvative democrat on Dec 21, 2011 at 08:28 AM in reply to Gerry
      this is not President Obama's fault, the house republicans are to blame, just aired on fox news, the republicans walk off the house floor refusing to hear or consider the bill, so put the blame where it belongs, the tea party republicans!!!
      • reply
        by Anonymous on Dec 21, 2011 at 10:12 AM in reply to conserrvative democrat
        Why has Obama allowed this to go on so loooonnnng. Obama needs to be the leader of the free world and knock some sense into Congress. Congress is not perfect, and they are politicizing everything, but Obama should be challenging them aggressively and he has failed to do this.
      • reply
        by Gerry on Dec 21, 2011 at 10:43 AM in reply to conserrvative democrat
        I don't think you understood my comment. I don't think you understand much of anything. Bulletin: Nobody can see or hear what you think you saw and heard on Fox News. You must some kind of genius Democrat shilling for Fox News the way you are.
        • reply
          by coservative democrat on Dec 21, 2011 at 03:05 PM in reply to Gerry
          watch fox news for yourself, and get off the tea channel, you are a tea party republican!!!
        • reply
          by Gerry on Dec 21, 2011 at 08:49 PM in reply to Gerry
          @ conservative dem I think you should get off the sauce. You spell conservative democrat incorrectly at 11:28 AM and then spell it differently, but still incorrectly, at 6:05 PM.
    • reply
      by GV on Dec 21, 2011 at 09:54 AM in reply to Gerry
      I guess you'd rather take the money from an already under funded ssi?I guess you want old people to eat dog food?
      • reply
        by Gerry on Dec 21, 2011 at 10:41 AM in reply to GV
        When will SS no longer be able to pay full benefits? Do you know what SSI is? SSI is Supplemental Security Income. SSI is already funded by general revenues.
        • reply
          by GV on Dec 21, 2011 at 12:22 PM in reply to Gerry
          Go ahead and admit it gerry,you dems don't care about ssi and old people.This bill cuts ssi,the same thing ya'll acuse the right of wanting to do.This is money that is not going to be paid into ssi.So you blind and disabled people to eat dogfood too?
        • reply
          by Anonymous on Dec 21, 2011 at 12:25 PM in reply to Gerry
          Thanks for pointing that out to gv,Gerry.Now we all know that not only do you want old people to starve,you also want blind and disabled people to starve.
        • reply
          by Gerry on Dec 21, 2011 at 03:34 PM in reply to Gerry
          @GV I don't think you know what is in the bill. HR 3630 has close to 400 pages. Which pages discuss SSI? The Reid McConnell Amendment has 34 pages and passed 89-10. 50 Dems were for. 39 Republicans were for. 7 Republicans against. 3 Dems against. Rand Paul didn't vote. This is a Dem bill? 39/46 Republicans means more than 84% of Republicans voting were for. Somebody told you what was in the bill because you're not capable of reading and understanding 400 pages. Whose words are you repeating?
        • reply
          by GV on Dec 22, 2011 at 05:33 AM in reply to Gerry
          Gerry,I don't have to read the bill or repeat anybody's words.I do know that if me and 160,000 pay $1000.00 less a year into ssi,that means that $1000.00 a year from 160,000 is not going to ssi,which means that ssi will not be getting that money.Now tell me again what ssi is.
        • reply
          by Gerry on Dec 22, 2011 at 06:33 AM in reply to Gerry
          @GV SSI is Supplemental Security Income. According to the Social Security Administration, SSI is funded by general tax revenues and not by Social Security taxes.
    • reply
      by GV on Dec 22, 2011 at 10:15 AM in reply to Gerry
      Ok gerry,so they are cutting social security,so like my first statement said,you must want old people who have paid in all their lives to eat dogfood.
      • reply
        by Gerry on Dec 22, 2011 at 03:08 PM in reply to GV
        The lost SS revenue is supposed to made up by general revenue. Thanks for 24 hours of misinformation.
  • by dog Location: gone on Dec 21, 2011 at 06:49 AM
    It's NOT a tax break it's NOT PAYING FOR SOCIAL SECURITY. Pay now or you will have NOTHING LATER.
  • by conservative democrat on Dec 21, 2011 at 06:05 AM
    the house republicans do not want to give americans the tax break period!!
    • reply
      by anon on Dec 21, 2011 at 07:00 AM in reply to conservative democrat
      we are like pawns in some sick twisted game they are playing. They don't care about the poor or the middle class only these big corporations and the top 10% rich folks in America.
      • reply
        by conservative democrat on Dec 21, 2011 at 08:30 AM in reply to anon
        typical tea party republican ideaolgy, occupy America and vote these tea party republicans out of office and take America back from big cooperations and wall street!!
        • reply
          by Anonymous on Dec 21, 2011 at 01:02 PM in reply to conservative democrat
          #occupy a loony farm.
        • reply
          by chris on Dec 21, 2011 at 03:33 PM in reply to conservative democrat
          A conservative democrap is an oxymoron
        • reply
          by Gerry on Dec 22, 2011 at 05:17 AM in reply to conservative democrat
          @chris "Oxymoron" is a Rush Limbaugh word isn't it? I've never heard an educated person use it except once. Rush Limbaugh is a high school graduate. How do you find out who the 250 richest people in the US are? And how do you find out their political orientations? How do you find out their political registrations? Why is 250 interesting? Dems have bandied about a surcharge on those who income is $1 million or more. R. Frank of the WSJ says there are 3.1 million US millionaires as of 2010.
        • reply
          by Anonymous on Dec 22, 2011 at 09:25 AM in reply to conservative democrat
          @Gerry Try Google.
    • reply
      by Anonymous on Dec 21, 2011 at 03:41 PM in reply to conservative democrat
      The House Republicans are trying to extend this by a year, not just 2 months. In the end this comes down to Obama not being able to rally either side to an agreement. Every President before him would be working the phones to get important legislation passed, but Obama thinks he doesn't need to do this, and this shows his lack of leadership.
  • by rob on Dec 21, 2011 at 04:30 AM
    This is just more proof that the Democrats do not care about the people...two months means that they, the dems, do not want to work...while the GOP is fighting for the people and forcing the dems to do their job!
    • reply
      by Anonymous on Dec 21, 2011 at 06:16 AM in reply to rob
      you are partly right but wrong by your claim that it is only the dems who are doing this. BOTH bills in the House and Senate were passed by bipartisan votes (that means repubs were in on it too) so our elected child-adults who are supposed to be working for us don`t and must be voted out at the next election. the suprise result is repubs voted for a middleclass tax increase - but they don`t care, they have protected the millionairs and billionaires.
      • reply
        by chris on Dec 21, 2011 at 04:07 PM in reply to
        A voice of ignorance. If you would check you would find that of the 250 richest people in America the majority are Democraps. A poor person never gave me job. If obama was really for the middle class; since the botom 47% doesn't income tax, then he should have their taxes lowered. simple solution
    • reply
      by Sean on Dec 21, 2011 at 07:03 AM in reply to rob
      Yes, the GOP is all for passing a budget and getting the economy on track. Every idea that they have brought to the table has been turned down by the democrats
      • reply
        by conservative democrat on Dec 21, 2011 at 08:32 AM in reply to Sean
        you really need to listen to the news then you will see it's the republicans who are turning down any help for the middle class and poor!!!
        • reply
          by Anonymous on Dec 21, 2011 at 09:35 AM in reply to conservative democrat
          Try getting your news from something other than MSNBC, NPR, ABC, NBC, CBS, etc. Try an international news source who doesn't have a specific goal to accomplish when they report US news.
        • reply
          by Anonymous on Dec 21, 2011 at 01:42 PM in reply to conservative democrat
          We, the middle class do not need anymore help from your beloved government.
  • by Surprise Location: leon county on Dec 21, 2011 at 02:57 AM
    Newbi R.s doing what they promised to do in the last mid terms "Grid Lock is good."
  • by Anonymous on Dec 20, 2011 at 07:31 PM
    a two month extension is a joke. What happens at the end of the two month?? does it go up, stay in place and what does the senate do, pass another two month extension?? If they can't do anything for at least a year at a time, why even pay them to be in Washington?? I think we should pass a law that says if they cant work together, then their pay is cut off until a budget is passed. There hasn't been a budget for 3 years now, just stop gap spending bills to keep the goverment running. Lets pass a balanced budget amendment like the states have and the people have in their own households. Why will the senate democrats not even consider a balanced budget?? because it will cut down on them spending money that they dont have.
    • reply
      by Anonymous on Dec 21, 2011 at 06:39 AM in reply to
      The only way to balance the budget will be to cut spending AND raise taxes. The sheep hired by the tea-party who think that it can be done by just cutting in the federal government are WRONG. I have yet to see any of those cuts include cuts to the pay and benefits that they recieve, just everyone elses. Until I see cuts to the pay and perks that those we elect and send to Washington I will just have to call BS on all that they do.
    • reply
      by conservative democrat on Dec 21, 2011 at 08:34 AM in reply to
      the year proposal that the republicans has brought to the table is full of spending for big cooperations and more tax breaks for the wealthy big cooperations, this report just moments ago by fox news!!!
    • reply
      by Anonymous on Dec 21, 2011 at 03:42 PM in reply to
      At the end of 2 months the DEMS get to extend it again, and then again making it seem like they are really passing tax cuts when in reality they are just doing what the REPS want to do now.
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