Republican leaders privately warned rank-and-file lawmakers on Wednesday to get behind President’s Obama’s requested payroll-tax cut extension or face election-year charges that the GOP raised taxes on Americans struggling in an uncertain economy.
While Republicans in the House and Senate remain divided over how to pay for the extension, both sides’ plans will call for spending cuts to offset the cost, drawing in large part from proposals outlined by recent bipartisan deficit-reduction working groups and commissions.
A plan released by Senate Republicans on Wednesday would place the $120 billion bill for a one-year extension of the payroll-tax cut on the back of the federal workforce. It calls for a three-year freeze in government salaries and a 10 percent cut to the federal government’s payroll.
The Senate GOP plan also includes a means test to keep taxpayers who earn more than $1 million from receiving various federal benefits.
That’s a nod to the Democrats’ proposal, which would pay for a $250 billion extension and expansion of the payroll-tax cut with a 3.25 percent surtax on wealthy earners—people with annual income exceeding $1 million. The Democratic surtax is a non-starter with Republicans in both chambers.
The Senate is expected to vote on Thursday evening on both the Democratic and Republican plans. And while neither plan can pass either chamber, Thursday’s votes will be an important starting point for real negotiations.
The House will wait until after the Senate votes to roll out its separate plan to extend the tax holiday. Republicans in that chamber, leaving a closed-door GOP conference, said House SpeakerJohn Boehner assured them that leadership was exploring a menu of potential spending cuts.
There’s no debate, though, about whether the extensions ought to be paid for. “The president has called for them to be paid for. Democrats have called for them to be paid for,” Boehner told reporters. “So, if in fact we can find common ground on these extensions, I think you can take to the bank they will be paid for.”
According to a leadership aide, the House GOP payroll-tax extension will likely include the funding mechanisms included in the Senate Republican bill, including the federal government pay freeze, workforce reduction, and means test for federal benefits. Those provisions were suggested by the Simpson-Bowles deficit-reduction commission and GOP aides said their inclusion indicates Republicans are seeking bipartisan support for their bill.
The House bill also will likely wrap in other measures—an extension of emergency federal unemployment benefits and a “doc fix” provision that stops an almost 30 percent fee reduction from hitting doctors who treat Medicare recipients.
Despite the call from Boehner to support extending the payroll-tax cut, aides indicated there remain significant differences among members about not just the funding but the need for the extension itself.
“To suggest that there is a unified position in either party for or against extending payroll at this point would be a misnomer,” one aide said.
At least some Republicans continue to cite concerns about the tax cut’s effect on the long-term fiscal health of Social Security. The payroll-tax holiday gives workers, on average, an additional $1,000 a year—about $27 a paycheck for a worker earning $50,000—but it diverts money from the ailing Social Security Trust Fund.
“Simply by itself, it is a bad vote,” said Rep. Pete Sessions of Texas, chairman of the National Republican Congressional Committee, calling it wrong to diminish payments to Social Security.
What’s clear is that allowing the benefit to expire is politically unpalatable for both parties. And that’s the point House leaders hammered home in their meeting with members.
Majority Leader Eric Cantor, R-Va., told reporters after the closed-door meeting, “We don’t want to raise taxes on anybody.” But despite the promises of spending offsets, a number of House Republicans said they felt painted into a corner.
“It’s real tough to be a position of being perceived as not preventing a tax increase, versus what could be doing more harm to the solubility of Social Security,” said freshman Rep. Bill Flores, R-Texas.
Posted on
Thu, December 1, 2011
by Kelsey Snell and Dan Friedman