Boehner rejects Senate plan to extend payroll tax cut

WASHINGTON -- House Speaker John Boehner on Sunday rejected a Senate plan to extend the payroll tax cut for two months, thwarting a deal cut by the White House and Senate Republicans that would prevent taxes from rising on middle-class workers in the New Year.

Boehner, R-Ohio, said the Senate plan to extend the payroll tax cut for only two months is "just kicking the can down the road" and called on Congress to come up with a bill that extended the break through 2012.

"We've got two weeks to get this done," Boehner said on NBC's Meet the Press. "Let's do it the right way."

A day earlier the Senate voted on a compromise plan that would have kept the payroll tax rate at the reduced 4.2% rate through February and required President Obama to make a decision on whether to approve building of the Canada-to-Gulf of Mexico Keystone XL pipeline within 60 days of passage of the bill. If Congress isn't able to cut a deal by year's end, the payroll tax rate will revert to 6.2% on Jan. 1.

Obama, in backing the two-month extension which passed 89-10 on Saturday, said that he expected Congress to vote to extend the tax cut through 2012 for 160 million Americans when lawmakers return from vacation next month. But the deal appeared to fall apart with Boehner's opposition to the plan, enraging congressional Democrats and the White House.

"Neither side got everything they wanted, but we forged a middle ground that passed the Senate by an overwhelming bipartisan majority," said Senate Majority Leader Harry Reid, D-Nev.

But rank-and-file House Republicans expressed stiff opposition to the Senate plan. Many, including House Majority Leader Eric Cantor, said they are unwilling to go along with the compromise because it would take money from the Social Security trust fund.

As the Senate prepared to vote for the bill calling for a two-month extension, the White House "understood that Boehner signed off on the bill," according to a senior administration official, who spoke on condition of anonymity to discuss private conversations.

Boehner described the Senate vote as "a good deal" and "a victory" Saturday in a conference call with House Republicans, a GOP source told CNN.

Brendan Buck, a spokesman for Boehner, said the speaker used favorable terms to describe Senate bill deal because it included a provision speeding up a decision on the Keystone XL pipeline. Boehner "laid out the options," to GOP lawmakers "but did not advocate taking the Senate bill," Buck said.

White House communications director Dan Pfeiffer accused House Republicans of playing politics with the payroll tax cut extension.

"It is inexcusable to do anything less than extend this tax cut for the entire year, and Congress must work on a one year deal," Pfeiffer said. "But they should pass the two month extension now to avoid a devastating tax hike from hitting the middle class in just 13 days."

House leaders, Buck said, would either send an amended bill to the Senate or resolve differences through House-Senate negotiations.

House Republicans were missing a chance to show Americans they're serious about helping the economy, said Gene Sperling, a top Obama economic adviser, Sunday. Backing the compromise, he said, "is the best way to send a clear signal to the American public that we are going to put the economy first, jobs first and politics last for a change, Sperling said on CNN.

Obama's backing of the Senate bill came after he earlier threatened to veto any payroll tax cut bill that was tied to the Keystone XL pipeline. Environmentalists have been pushing Obama to stop the pipeline that would transport carbon-heavy tar sands oil.

Sperling noted that State Department officials have said "it was very unlikely … that 60 days would be enough time … to guarantee to the American people that an adequate safety and health and environmental review had been done."