GOP leaders to propose payroll tax cut extension without funding offsets, as two sides trade blame

Published February 14, 2012

| FoxNews.com

After House Republicans said they plan to roll out a "backup plan" to keep the payroll tax cut for the remainder of the year but not include any funding offsets, President Obama on Tuesday is pushing the issue to make sure Congress doesn't decouple unemployment benefits from the package.

The president is hosting an event at the White House to urge Congress to act to extend both benefits. He will be joined by Americans who have shared what $40 a paycheck means to them and who would be affected if Congress doesn't act to extend the tax cut.

The White House is also harnessing the power of social media, asking people to write in to the White House page, use the Twitter hashtag #40dollars or post stories on the White Hosue Facebook wall to push for the extension.

On Monday, congressional Republicans on the bipartisan House-Senate payroll tax cut conference committee offered to cut the tax rate until the end of the year without finding $200 billion in offsets to pay for the extension.

House GOP leadership informed their caucus that a payroll-only, 10-month extension would reach the floor this week. It would not include extending unemployment insurance or a "doc fix" aimed at keeping Medicare doctors from being hit with a drastic reduction in their federal reimbursement rate.

"Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year," House Speaker John Boehner, R-Ohio, Majority Leader Eric Cantor of Virginia and Majority Whip Kevin McCarthy of California said in a written statement.

GOP leaders, clearly hoping to avoid the thrashing they received in December when they ran out the clock on the tax cut, are offering a solution fraught with potential pitfalls, especially after Republicans derided Senate Majority Leader Harry Reid last week for indicating he had a "backup plan."

"It's unfortunate that House Republican leaders are manufacturing another crisis even as the Conference Committee continues to do its work," said Ways and Means Committee Ranking Member Sander Levin, D-Mich. "It's completely irresponsible to leave behind nearly 5 million unemployed Americans whose benefits will expire and 47 million seniors and disabled Americans whose access to health care would be jeopardized. House Republicans chose the go-it-alone path in December to nearly disastrous effect and American families cannot afford a repeat performance."

"I support a straight extension of the payroll tax cut," House Budget Committee ranking Democrat Chris Van Hollen, told reporters Monday, later amending his statement to say it's "preferable" to also extend unemployment benefits and the doctor fix 

The GOP move was telegraphed on Sunday by House Budget Committee Chairman Paul Ryan, who said Republicans want to make sure the Social Security Trust Fund doesn't lose more money because of an unpaid payroll tax cut. But he said the GOP hit a wall from Democrats refusing to agree to offsets that they previously supported.

"We have offered literally scores of different offsets. We've taken provisions from the president's own budget as ways of paying for this payroll tax holiday, yet they continue to insist on not agreeing to those kinds of things," Ryan told ABC's "This Week."

"I do believe this will get extended. But when we make offer after offer based on policies that we know Democrats and the president have supported in the past, yet they still insist on not coming to agreement, it's difficult to see exactly how this is going to pan out," he added.

Democrats say they have negotiated in good faith, but Republicans have insisted on offsets that are non-starters, like a continued freeze on federal workforce pay and Medicare means-testing.

Democrats also have held fast to their own non-starter -- a surtax on millionaires. The House GOP move could potentially remove that argument, for now, one that Republicans, according to polling, have been losing.

And while the GOP leaders' approach may attract considerable criticism within the party in the short-term, the strategy may be to aim for the longer term. 

On Monday, President Obama introduced his budget, which Republicans immediately slammed as full of gimmicks. While the president said his proposed budget will reduce the deficit by $4 trillion over the next decade, the proposal increases deficits by $6.6 trillion, and Republicans repeatedly called it as a job killer because it raises taxes on corporations and high-income earners, possibly prompting them to reduce hiring.

Speaking about his budget, Obama, surrounded by students and faculty at Northern Virginia Community College, said Congress needs to pass an extension of the payroll tax cut and unemployment insurance "without drama and without delay and without linking it to some other ideological side issues." 

"We've been through this before, remember? We've seen this movie. We don't need to see it again," he said.

With time running short -- the hope was to have a decision on how to pay for the cut by this Tuesday --  the question of how to pay for extended cuts, unemployment insurance and doctor payments from Medicare is still being negotiated by House and Senate conferees.

A Republican source told Fox News on Monday that the bipartisan talks are "making progress," and the staffs on both sides were working furiously to bring together a deal as soon as this week.

No more "dog and pony" show meetings, the source said of the progress.

In the meantime, Republicans fault Democrats for putting them in an untenable position. 

"Any offer that gets taken to Harry Reid gets turned down. He seems to be trying to pull the rug out from under any successful completion of this effort and seems to be a cheerleader for failure. I want to extend the payroll tax holiday. I want to extend unemployment benefits. I want to make sure our seniors on Medicare can continue to see their doctors. And right now Harry Reid is a roadblock preventing that," Sen. John Barrasso, R-Wyo., a conferee on the payroll tax conference, said Monday.

"This is not our first choice," the House Republican leaders said. "Our goal is to reach a responsible agreement in conference. But in the face of the Democrats' stonewalling and obstructionism, we are prepared to act to protect small businesses and our economy from the consequences of Washington Democrats' political games."

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