Republican leaders fear that the party, which has spent the past year fighting Democrats’ proposals to raise taxes on the wealthy, cannot now allow the payroll tax to increase without handing Democrats a powerful election-year argument that the GOP supports lower taxes only for the rich.
After suggesting that they might vote on a GOP-sponsored proposal this week, Republicans now plan to keep debating the issue in the coming days and are unlikely to vote until next week.
House Speaker John A. Boehner said Wednesday that Republicans will put forward a measure that would renew the payroll tax cut when it expires, but also would require spending cuts that would be used to restore the lost funding to Social Security.
“We have a trust fund that we all know is going broke,” Boehner said. “. . .So if, in fact, you’re going to take money out of the Social Security trust fund, in our view, it has to be replaced.”
Rep. Bill Huizenga (R-Mi.) said he is eager to see what GOP leaders are “cooking up. “Do I want to put money into people’s pockets? Absolutely,” he said. “Am I concerned about the long-term impact this has on the social security trust fund? Absolutely.”
Republican leaders say they want to find a compromise with Democrats that would keep the payroll tax rate at 4.2 percent next year, rather than allowing it to revert to 6.2 percent — but they reject a Democratic plan to charge a surtax on people who make more than $1 million a year to pay for the tax cut.
Democrats were unable to get the 60 votes necessary in the Senate to advance a $265 billion payroll tax cut proposal last week that would have been funded through a 3.25 percent surtax on incomes over $1 million. A scaled-back $185 billion bill that contains a somewhat smaller surtax also is likely to be killed.
Senate Majority Leader Harry M. Reid (D-Nev.) told reporters Tuesday that the Senate is likely to vote on the Democrats’ latest proposal on Friday.
“I think most Americans, most Republicans, are very reluctant to raise taxes on anyone during this economic crisis that we find ourselves in,” Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday.
Democrats have proposed lowering the tax even further, to 3.1 percent, saying that the more workers keep and spend, the better it is for the economy.
At that rate, the average family would pay $1,500 less than it would at the 6.2 percent rate, at a cost of $185 billion. If the rate remains at 4.2 percent, the average family will continue to save $1,000 per year.