Senate, House on collision course over payroll tax cut extension


House Speaker John Boehner (R-Ohio) speaks during a news conference in Washington on Monday, Dec. 19, 2011. (Andrew Harrer/BLOOMBERG)
December 19, 2011

Senate Majority Leader Harry M. Reid on Monday rejected a demand from House Speaker John A. Boehner to reopen negotiations on a measure to extend a payroll tax cut, setting the Democratic-majority Senate on a collision course with the Republican-controlled House as a year-end deadline approaches.

With a deadlock over the measure looming, Reid (D-Nev.) warned that millions of Americans could see their taxes rise by $1,000 next year because of what he called the “intransigence” of GOP House members. Democrats also sought Monday to ramp up pressure on GOP lawmakers by launching robocalls in 20 districts across the country.

The White House, meanwhile, urged House Republicans to “do the right thing” and pass the bill already approved by nearly 90 percent of senators, including 83 percent of the chamber’s Republicans.

Boehner (R-Ohio) said Monday morning that the House is poised to defeat the Senate-passed bill to extend the payroll tax cut for two months because the measure “creates uncertainty” for the U.S. economy. Instead, he said the House would send the bill to a bicameral conference committee. Boehner on Sunday began retreating from his previous support for the package because of opposition from conservative Republicans.

“I expect that the House will disagree with the Senate amendment and instead vote to formally go to conference,” Boehner said at news conference as House members were returning to Capitol Hill from a weekend recess.

Two hours later, Reid hit back, saying that negotiations were over. He said the House has two options: Accept the bipartisan compromise he worked out with Senate Minority Leader Mitch McConnell (R-Ky.) or allow taxes to rise next month.

“Senator McConnell and I negotiated a compromise at Speaker Boehner’s request,” Reid said. “I will not reopen negotiations until the House follows through and passes this agreement that was negotiated by Republican leaders and supported by 90 percent of the Senate.”

He said negotiations for extending the tax cut for a full year should continue in January. But, for now, Reid said, both chambers should adopt the two-month deal.

“My House colleagues should be clear on what their vote means today,” he said. “If Republicans vote down the bipartisan compromise negotiated by Republican and Democratic leaders, and passed by 89 senators including 39 Republicans, their intransigence will mean that in 10 days, 160 million middle-class Americans will see a tax increase, over 2 million Americans will begin losing their unemployment benefits, and millions of senior citizens on Medicare could find it harder to receive treatment from physicians.”

Reid said Boehner “should not walk away from” the negotiated compromise, “putting middle-class families at risk of a thousand-dollar tax hike just because a few angry Tea Partiers raised their voices to the speaker.”

In a White House news briefing, press secretary Jay Carney said Monday that Boehner had urged fellow House Republicans to support the Senate measure. “So he was for it before he was against it,” Carney said.

He said President Obama holds out hope that the measure can pass the House, where only about 12 percent of Republicans would needed for passage if all Democrats vote in favor.

“I don’t think it’s too much of a long shot to say that 25 Republicans in the House might break ranks,” Carney said. “We remain hope that House Republicans . . . will do the right thing and support a proposal to extend the payroll tax cut for two months.” He blamed the current impasse on “a subfaction of one party in one house basically dictating the direction of the majority in that house.”

Failure to pass the bill would have “a negative impact on the economy” and “increase the possibility of a recession,” Carney said.

Boehner’s move also came under fire earlier in the day from a member of his own party in the Senate. Sen. Scott Brown (R-Mass.) called the decision by House Republicans to defeat the Senate bill “irresponsible and wrong.”

“I appreciate their effort to extend these measures for a full year, but a two-month extension is a good deal when it means we avoid jeopardizing the livelihoods of millions of American families,” Brown said in a statement. “The refusal to compromise now threatens to increase taxes on hard-working Americans and stop unemployment benefits for those out of work. During this time of divided government, both parties need to be reasonable and come to the negotiating table in good faith.”

On Saturday, the Senate approved a two-month payroll tax cut extension on a bipartisan 89-to-10 vote. The bill includes a GOP-backed provision that would force the Obama administration to make a quick decision on the Keystone XL pipeline. House GOP lawmakers would like to see an extension of the payroll tax cut for an entire year.

Democrats maintained that Boehner’s comments “changed nothing” in the calculus of the payroll tax debate.

“The House can pass the compromise negotiated by Republican leaders and passed by 90 percent of the Senate or force a tax hike,” said a Senate Democratic leadership aide, who spoke on condition of anonymity in order to discuss the party’s strategy. “No negotiations until they follow through.”

Failure by lawmakers to pass a deal before New Year’s Day will trigger a two percentage-point payroll tax increase on 160 million workers, the halting of unemployment benefits for some jobless Americans and a reduction in reimbursement rates for doctors who treat Medicare patients.

Far-reaching repercussions for both political parties also loom.

“The idea that tax policy can be done two months at a time is the kind of activity that we see here in Washington that’s really put our economy off its tracks,” Boehner said. “Last week, both chambers worked together to pass a full-year bill to fund our government. And I don’t think this issue is any different. It’s time for Congress to do its work; no more kicking the can down the road.”

House Republicans oppose the short-term nature of the deal, arguing that it would be bad tax policy to provide a limited extension, as well as bad politics to keep the issue alive for President Obama.

“Frankly, I don’t think anybody in the House Republican conference sees it as much of a compromise,” Rep. Tom Cole (R-Okla.) said of the Senate-passed deal.

He said Republicans were pleased that they had won on the issue of whether to grant a permit for the Keystone XL oil sands pipeline, which the GOP says will create thousands of jobs. But, Cole added, there is “a lot of angst” among lawmakers on the duration of the tax-cut extension.

“Our conference is prepared to stay here to work through Christmas, New Year’s, whatever it takes,” he said.

Congressional Democrats and the White House dug in their heels Sunday and cast the decision facing Boehner as one between a bipartisan, short-term extension of the payroll tax holiday and no extension at all.

Reid, who had negotiated the deal with McConnell late Friday, urged the House to take up the measure and noted that last week Boehner had requested that the two Senate leaders meet to work toward an agreement.

“I would hate to think that Speaker Boehner is refusing to act on this bipartisan compromise because he is afraid it will actually pass, but I cannot imagine any other reason why he would not bring it up for a vote,” Reid said in a statement.

Boehner also faced a withering attack from the White House. Communications director Dan Pfeif­fer similarly argued that “if House Republicans refuse to pass this bipartisan bill to extend the payroll tax cut, there will be a significant tax increase on 160 million hard-working Americans in 13 days that would damage the economy and job growth.”

Pfeiffer said that the administration believes Congress must continue working on a one-year deal but that lawmakers “should pass the two-month extension now to avoid a devastating tax hike from hitting the middle class in just 13 days.”

McConnell, however, echoed Boehner’s call for lawmakers to amend the Senate-passed plan.

“The House and the president both want a full-year extension,” McConnell spokesman Don Stewart said. “The best way to resolve the difference between the two-month extension and the full-year bill, and provide certainty for job creators, employees and the long-term unemployed, is through regular order, as the speaker suggested.”

The way forward remains unclear.

When the House convenes Monday night, it will hold an up-or-down vote on the Senate-passed plan, which Republicans expect will fall short of passage. The chamber may then move to amend the Senate-passed bill or to approve a motion for both chambers to iron out the impasse through a conference committee. Boehner made the case for a conference committee in an interview Sunday on CBS’s “Meet the Press.” He said lawmakers used a committee approach to reach an agreement on a nearly $1 trillion government funding bill that passed both chambers last week.

“Earlier this week, both the House and Senate, in a bipartisan, bicameral way, funded our government through September 30,” Boehner said. “We did it in a regular process, regular order, and what the regular order here is a formal conference between the House and Senate.”

The Senate, which adjourned for the year Saturday after approving the payroll tax package, could come back to Washington to work on the measure. But Reid’s statements suggest that, at least for the moment, leaders have no intention of doing so.

A House Democratic aide said leaders exchanged phone calls all day Sunday and that members were planning to hold a full caucus meeting Monday.

Both sides remain at odds over just how Friday’s apparent deal turned into Saturday’s stalemate. The biggest lingering question: whether McConnell and Boehner were working closely in tandem throughout the final round of negotiations or whether, as GOP aides in both chambers said Sunday, McConnell was negotiating on his own and not as Boehner’s proxy.

The latter was contradicted somewhat by McConnell himself, who told reporters Friday night that he stayed in close contact with Boehner throughout his negotiation with Reid.

“I’m optimistic that we’re going to do well in the morning, and obviously I keep the speaker informed as to what I’m doing,” McConnell said then.

If Boehner was apprised of McConnell’s conversations, then the question becomes whether he and other House Republican leaders misjudged how their members would react to a two-month deal. Many rank-and-file Republicans showed such strong opposition to a short-term plan during a closed-door meeting Friday that several lawmakers said they believed the measure would be a non-starter.

Senate Republicans, however, overwhelmingly voted for the two-month plan Saturday. And on Sunday, Democrats seized the GOP discord, accusing Boehner of reneging on negotiations and yielding to his conservative base.

A House Republican aide said leaders were not shocked by the harsh reaction to the deal during a conference call with rank-and-file members Saturday. A Senate Republican aide maintained that “we did not know what the House would do, so it’s hard to say it was a surprise.”

Staff writers William Branigin and Paul Kane contributed to this report.

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