The Washington Post

House GOP expresses concern about Obama payroll tax cut plan

Republican House leaders expressed new skepticism about payroll tax cuts that are a key part of President Obama’s jobs bill, in a Friday memo outlining areas of agreement and disagreement with the $447 billion initiative.

In the letter to fellow House Republicans, GOP leaders call on Obama to negotiate pieces of the jobs package separately. They say there’s room for agreement on some of Obama’s ideas but they reject others outright.

“We believe there are areas of common agreement, and areas worthy of further conversation where agreement -- assuming there are good faith discussions -- may be possible,”write Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), Whip Kevin McCarthy (R-Calif.) and Conference Chairman Jeb Hensarling (R-Tex.).

The memo largely echoes Republican analysis of the bill that has emerged since Obama unveiled it in a speech to a joint session of Congress Sept. 8.

The Republican leaders say there is room for movement on new free trade deals with South Korea, Columbia and Panama, expanded tax incentives to encourage businesses to hire veterans and the extension of 100 percent expensing, which encourages business investment.

But they signal newly robust concerns with Obama’s proposal to halve the payroll taxes for workers through 2012, cut payroll taxes for employers for their first $5 million in wages paid and temporarily eliminate them entirely for businesses hiring new worker or raising salaries.

They write that they are concerned about the potential impact of cutting taxes for businesses next year and then allowing them to jump suddenly at the end of 2012.

“There may be significant unforeseen downsides to large temporary tax cuts immediately followed by large tax increases,” suggesting the result could be to “create significant new uncertainty in an already uncertain economy.”

Even before the Obama jobs plan was unveiled, Democrats slammed Republicans over the possibility that they might refuse to back a tax cut if it were advanced by the Democratic president.

The GOP has reacted gingerly to Obama’s payroll tax proposal since it was released and, in their memo, House leaders write that a “commitment to honest and fruitful discussions between the White House and Congressional Leaders” could lead to an agreement on tax relief for the middle class.

But they warn that they will not accept a payroll tax cut paid for, as Obama has proposed, by limiting deductions for those making more than $250,000--which the GOP says is a tax increase that will result in a drop in charitable giving.

They also rule out portions of the bill that would provide $30 billion for state and local governments to hire teachers and public safety workers, noting that the approach is similar to money provided in the 2009 stimulus bill.

“This band-aid approach masked over the true fiscal problems facing states and local governments,”they write.

And they say they will oppose a proposal to spend federal dollars on school construction, traditionally a local responsibility, and $15 billion to refurbish foreclosed homes to stabilize neighborhoods hit by the housing crisis.

Rosalind Helderman is a political enterprise and investigations reporter for the Washington Post.


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