Congress Grapples With Payroll Tax Holiday Extension

Dec 2, 2011 4:48pm
ap john boehner ll 110803 wblog Congress Grapples With Payroll Tax Holiday Extension

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On the heels of the Supercommittee’s failure to strike a bipartisan deal, Republicans and Democrats are now sparring over the best method to finance a payroll tax holiday extension, which is set to expire at the end of the month.

House Speaker John Boehner presented a slate of options to the House Republican Conference this morning, but multiple GOP lawmakers leaving the meeting said that a lack of consensus remains within the conference over whether Congress should even extend the tax break, not to mention how best to offset the cost.

“We had a really lively discussion about it and we’re going to continue to work with members to see if we can find a path forward on this and many issues,” Rep. Dave Camp, the chairman of the Ways and Means committee, said. “We don’t have a final proposal. We just have some ideas that we’re talking about and we’re still trying to reach consensus. So we’re still caucusing with our members, trying to find the best way to move things forward.”

Thursday night the Senate rejected two alternative proposals to extend the payroll tax cuts. Even the GOP’s bid failed to win over a majority of Republican senators.

Rep. Jeff Flake, a Republican from Arizona, said that unless Congress reforms entitlements, the recurring annual debate on the payroll tax cut will not be settled. Flake, who is running for Senate in next year’s election, said that he disagrees with the GOP leadership over Congress’s obligation to extend the tax break.

“I do think [the Republican leadership] is misreading it.  I just think they’re wrong on this. I think they’re wrong,” Flake, R-Ariz., said. “Unless we have the courage to address other things, entitlement reform, then we shouldn’t do it. If we have the courage to address entitlement reform, yeah, great, but I don’t think we do, and I think that the failure of the supercommittee to come to an agreement was evidence of that.”

It’s a tricky predicament for Republicans to consider. On one hand they don’t want to be seen as voting to raise taxes on the middle class by allowing the popular tax break to expire, but on the other hand they’ve pledged to cut spending and tackle the deficit and many conservatives are frustrated at the pace of progress on that front.

“People are concerned that our constituents won’t understand [letting it expire]. All they know is they’ll get a hit – as I will, as everybody will – if you get rid of this payroll tax holiday,” Flake said. “This is representative democracy. That’s why we’re here. I mean, if we don’t have the courage to say, ‘Maybe people don’t understand that,’ but we’re supposed to because we’re here and we understand the long-term outlook.”

But with the House targeting adjournment Dec. 16, time is running short on lawmakers to reach an agreement and work through its to-do list before lawmakers head home for the holidays.

“We can’t leave here without passing this. We have to stop toying with the American people and their economic security,” Minority Leader Nancy Pelosi, D-Calif., said. “We know that we have to do it. It’s time for us to sit down and do this in a bipartisan way as we did when President Bush was president. Christmas is coming, families are concerned.”

“Coal in the stocking ought not to be what we leave for the American people at the end of this year,” Minority Whip Steny Hoyer, D-Md., echoed.

Beyond the payroll tax cut extension, the House also must reconcile its differences on unemployment insurance extension, and sustainable growth rate (SGR for short, also known as the “Doc-fix”) that reimburses physicians caring for Medicare patients.

Pelosi suggested Congress take money from the Overseas Contingency Operations [OCO] fund to pay for SGR and the payroll tax cut extension, a proposition unlikely to win over any House Republicans, who contend the war savings should go toward paying down the deficit.

“[OCO] has been something that Republicans have used in their budgeting, so I think if there’s anything that’s important, it is the economic security of America’s families, and we could use it for extending the payroll tax and removing all the uncertainty in SGR,” Pelosi said. “If we have to pay for the payroll tax cut, we’re perfectly willing to do that even though the Republicans never want to pay for the tax cut for the wealthiest people in our country. Doesn’t that strike you as funny?”

Asked whether Democrats are winning the message battle by contending that Republicans are anti-middle class tax cut and only protecting the wealthy, the speaker cited his own family’s economic diversity as an anchor for his conservative principles, and said Democrats can “come out with all the rhetoric they want to come out with.”

“Listen, I’ve got 11 brothers and sisters on every rung of the economic ladder, all right?” Boehner, R-Ohio, said. “My dad owned a bar. I know what’s going on out in America, and the fact is that Republicans are trying to do everything we can to allow American families and small businesses to keep more of what they earn, to try to get this government off the backs of employers so that they can begin to hire people.”

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