House GOP postpones vote to extend payroll tax cut

After calling lawmakers back to Washington, the GOP-led House postponed votes Monday intended to reject a compromise measure to extend President Obama’s payroll tax break for 160 million working Americans.

Republican leaders were rethinking strategy after a lengthy closed-door meeting with rank-and-file Republicans who oppose the Senate-passed bill that would continue for two months the tax break, which expires Dec. 31.

Votes are now expected Tuesday, but Republican resistance has put the fate of the tax cut on an uncertain course. The Senate refused to negotiate further until the stopgap measure ensures workers won’t see a tax hike.

Rank-and-file Republicans have pushed House Speaker John A. Boehner to instigate a showdown he hoped to avoid. Failure to resolve the impasse would result in an average $1,000 tax hike in the new year, and mainstream economists warn it would chisel growth from the struggling economy.

“I don’t believe it’s going to be that difficult to come to an agreement,” Boehner said.

He was upbeat at the late-night meeting and the troops rallied around references to “Braveheart” as they dug in for a prolonged battle.

Fellow Republicans are increasingly anxious with their House colleagues’ position -- especially after the Senate overwhelmingly approved the compromise package in a rare Saturday vote. Many Americans are strapped for cash this holiday season, and the package included the tax break as well as an extension of unemployment benefits that also expire at the end of the year and prevents a pay cut for doctors who treat Medicare patients.

Several GOP senators urged their House counterparts to accept the temporary deal while talks continue. Lawmakers are also weary of a prolonged political battle throughout the holidays.

“There is no reason to hold up the short-term extension while a more comprehensive deal is being worked out,” said Sen. Dean Heller (R-Nev.).

Rep. Tom Rooney (R-Fla.) said the stopgap measure, while not the preferred choice, “would be better than letting this opportunity slip by.”

At the same time, rank-and-file Republicans in the House were under pressure from tea party groups that urged a no vote. Conservatives do not believe the tax break, which this year shaved the Social Security tax from 6.2% to 4.2%, is helping to stimulate the economy. They also doubt the retirement trust fund will be replenished with offsetting budget cuts.

Democrats have calculated that it is better to resist Boehner’s call for continued negotiations, believing they will be in a better bargaining position in the new year if pressure is put on the GOP for allowing taxes to rise on working Americans. The Senate has left for the holidays, and Senate Majority Leader Harry Reid (D-Nev.) reiterated Monday that he would not negotiate until the House passed the temporary bill. The White House appears to back that strategy.

“The House needs to act or else Americans are going to have their taxes go up,” said Press Secretary Jay Carney.

Obama has postponed a visit to Hawaii, where his family is already vacationing for the holidays.

Neither side was pleased with the two-month extension, preferring to extend the tax break and other provisions for a year. But senators from both sides agreed it was the best outcome after talks stalled over how to pay for a one-year extension.

Covering the costs remains the key divide. Republicans rejected Democrats’ proposal to impose a tax on people earning $1 million or more a year. The GOP’s own House-passed bill would have cut unemployment benefits, federal worker pay and imposed higher fees for wealthier seniors on Medicare -- proposals Democrats oppose.

Unable to reach a broad deal, Reid and Senate Republican leader Mitch McConnell of Kentucky forged the stopgap measure, with the $33-billion cost paid for by a new fee on home loans backed by the government entities Fannie Mae and Freddie Mac that had been in the House-passed bill.

Boehner has come under criticism for failing to get his troops in line behind the compromise. He encouraged the Senate to come up with its own package, and was kept updated on the talks between McConnell and Reid

But once the contours became known, his rank and file revolted hours after Senate passage. Boehner stood by his troops and announced his opposition.

House Republicans say they can do better than the short-term extension and want to reopen talks on the broader deal.

Such an approach would be the traditional way of legislating, but one that has increasingly become lost in partisan Washington. GOP leaders hoped to navigate back to that process, which would help to legitimize the outcome and make compromise more acceptable.

On Monday, a national payroll consortium warned that the stopgap measure may be unworkable, a prospect the GOP seized on to make its case for the one-year deal. The group suggested that a slight tweak to make the payroll deduction retroactive once a final deal is approved would cover its concerns.