U.S. House rejects 2-month payroll tax cut

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Updated: December 20, 2011, 8:15 PM

 

Herrera Beutler supports payroll tax cut extension

U.S. Rep. Jaime Herrera Beutler, R-Camas, was one of seven Republicans who rebelled against a GOP effort Tuesday to defeat a Senate-approved bill to extend the payroll tax cut.

Herrera Beutler voted against a motion to reject the two-month payroll tax cut extension, said her spokesman, Casey Bowman.

Last week, Herrera Beutler voted for a bill that would have extended the tax cut for a year, but that measure failed in the House.

“I support continuing the payroll tax cut, extending unemployment insurance and making sure Medicare patients have access to the medical care they need,” she said in a statement. “I had hoped the Senate would have agreed that a year extension is better than two months. But I know that families in Southwest Washington are struggling to make ends meet, and I wanted to eliminate any of their fear that this relief wouldn’t be in place Jan. 1.”

— Paris Achen, The Columbian

WASHINGTON — Continuing a tax cut of up to $40 a week for workers and unemployment benefits for millions of jobless hit a wall Tuesday as the House rejected a two-month extension of both, and President Barack Obama blamed Republicans for the stalemate.

“The clock is ticking, time is running out,” Obama said shortly after the House voted 229-193 to request negotiations with the Senate on renewing the payroll tax cuts for a year.

House Speaker John Boehner, told that Obama had sought his help, replied, “I need the president to help out.” His voice rose as he said it, and his words were cheered by dozens of Republicans lawmakers who have pushed him and the rest of the leadership to pursue a more confrontational strategy with Democrats and the White House in an already contentious year of divided government.

This time, it wasn’t a partial government shutdown or even an unprecedented Treasury default that was at stake, but the prospect that payroll taxes would rise on Jan. 1 for 160 million workers and long-term unemployment benefits end for millions of jobless victims of the worst recession since the 1930s.

Yet another deadline has been entangled in the dispute, this one affecting seniors, but the administration announced it had finessed a way around it. Officials said paperwork for doctors who treat Medicare patients in the early days of the new year will not be processed until Jan. 18, giving lawmakers more time to avert a 27 percent cut in fees threatened for Jan. 1.

Whatever the stakes, there was little indication that Republicans would get their wish for negotiations with the Senate any time soon. Senate Majority Leader Harry Reid, D-Nev., issued a statement saying he would be happy to resume talks on a yearlong measure — “but not before” the House ratifies the two-month bill and sends it to Obama for his signature.

Given Obama’s remarks and Reid’s refusal to negotiate, it was unclear what leverage Republicans had in the year-end standoff. It appeared likely the partisan disagreement could easily persist past Christmas and into the last week of the year.

Sowing confusion

The standoff was sowing confusion in business, running out of days to adapt to any new payroll tax regimen. Even the Senate’s proposed two-month extension was creating headaches because it contained a two-tiered system geared to ensuring that higher-income earners paid a higher rate on some of their wages, according to a trade group.

“There’s not time enough to do that in an orderly fashion,” said Pete A. Isberg, president of the National Payroll Reporting Consortium trade group. “We’re two weeks away from 2012.” He wrote a letter to congressional leaders this week warning that the Senate bill “could create substantial problems, confusion and costs.”

Democrats pounced on Republicans for rejecting the Senate bill, emboldened by polls finding Obama’s approval rising and that of the congressional Republicans fading. They noted that several lawmakers whom Boehner appointed to negotiate a compromise had recently criticized an extension of payroll tax cuts.

Democrats also introduced legislation in the House to ratify the two-month bill that passed the Senate.

Rep. Steny Hoyer, D-Md., the second-ranking House Democrat, asked Majority Leader Eric Cantor, R-Va., if he was “prepared to bring that bill to the floor” if no compromise was in sight by year’s end.

Canter dodged the question, responding that if Democrats wanted to do their part, they could appoint negotiators.

They didn’t.

For his part, Boehner sent a letter to the president, noting he had requested a yearlong extension of the tax cut and the House had approved one. “There are still 11 days before the end of the year, and with so many Americans struggling, there is no reason they should be wasted,” he wrote, asking Obama to call the Senate back from its year-end vacation.

In his appearance before White House reporters, Obama said Republicans would be to blame for the consequences of a standoff. “Right now, the recovery is fragile, but it is moving in the right direction,” he said. “Our failure to do this could have effects not just on families but on the economy as a whole.” Obama requested the extension of the payroll tax and unemployment benefits in the fall as part of his jobs program.

As recently as Friday, it appeared a compromise was in sight on the legislation.

After efforts to agree on a yearlong extension sputtered, Senate Republicans and Democrats agreed on the two-month renewal, with the bill’s estimated $35 billion cost to be covered by an increased fee on mortgages backed by Fannie Mae and Freddie Mac. That assured deficits wouldn’t rise, a key Republican objective.