Congress hit full brinkmanship mode, inching toward a standoff as Senate Democrats warned that a House GOP threat to leave for Christmas without a deal on extending an employee payroll tax holiday would backfire politically.
Senate Democrats and President Obama will remain in town until the extension passes, and would use that time to bash absent Republicans, Senate Democratic leaders warned in a news conference Wednesday.
"We will make sure we pass this tax cut for the middle class and we are not going to go home until we make sure it’s complete,” Senate Majority Leader Harry Reid, D-Nev., said. “We can do it the easy way or we can do it the hard way.”
For his part the President weighed in.
President Obama warned on Wednesday he will block any effort by House Republicans to force him to approve the controversial Keystone pipeline as a price to get an extension of the payroll tax cut. “Any effort to try to tie Keystone to the payroll tax cut I will reject,” he said firmly at a brief press conference at the White House after a meeting with Canadian Prime Minister Stephen Harper.
“Everyone should be on notice,” he said, adding, “The reason is because the payroll tax cut is something that the House Republicans as well as Senate Republicans should want to do regardless of any other issues.” The economy, he insisted, is just too “fragile” to let taxes go up on most Americans. “So it should not be held hostage for any other issues they could be concerned about.”
Obama said his opposition extends to any other issue that Republicans want to tie to the payroll tax issue. “My warning is not just specific to Keystone,” he said. “Efforts to tie a bunch of other issues to what is something they should be doing anyway will be rejected by me.”
“I don’t expect to have to veto it because I expect there will be enough sense on Capitol Hill to do the people’s business,” Obama said. But he added, “It is fair to say if the payroll tax cut is attached to a whole bunch of extraneous issues not related to making sure the American people's taxes do not go up on January 1st, it is not something I will accept.”
With House Republicans struggling to align behind a bill to extend the payroll tax cut and unemployment benefits, GOP aides said the House might adjourn by Dec. 16 with no deal if Democrats don’t compromise. Democrats want to prevent House leaders from trying such a move by threatening dire political results for the GOP.
Sen. Charles Schumer, D-N.Y., said Democrats will keep the Senate in through Christmas or New Year’s Day if needed. Reid said Obama, in a meeting with the leaders earlier on Wednesday, pledged to put off a vacation until Congress finishes its business. Reid, paraphrasing, said Obama told the leaders “Michelle and the girls will have a great time in Hawaii; they don’t need me.”
Senate Democratic and Congressional GOP leaders all want to at least extend the current 4.2 percent payroll tax rate and federal emergency unemployment benefits. Both sides want a “doc fix” protecting physicians who accept Medicare from a 27 percent pay cut. And all are willing to use some of the same provisions to fund a deal on those extensions. Those potential offsets include a means test preventing millionaires from receiving some federal benefits and various mandatory spending cuts considered this fall by the super committee that do not target health care, such as an extended pay freeze for federal workers.
Senate Democrats said they are taking nothing off the table except further cuts to discretionary spending. Democrats said they are also willing to accept a deal that has no offsets at all.
Despite such overlap, the main obstacle to a deal is resistance by rank and file Republicans to their leaders’ proposals. While Republican leaders view extending the payroll holiday and unemployment benefits as a political necessity, many of their members are not on board. Facing a revolt, House Republican leaders put off until at least next week a vote on their own year-end proposal.
The Senate is set to vote by Friday on new Democratic proposal to cut the employee payroll tax rate. Senate Republicans, after fracturing in a vote last week over an alternative GOP proposal, may not offer any alternative this time, suggesting they will instead await a House GOP bill.