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Republicans Take Baby Steps on Payroll-Tax Cut Republicans Take Baby Steps on Payroll-Tax Cut

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ECONOMY

Republicans Take Baby Steps on Payroll-Tax Cut

Republican congressional leaders appear taken aback by sharp pushback from the rank and file to their advocating a reduced payroll-tax rate for employees and an extension of federal unemployment benefits.

Opposition to the leaders’ course, expressed in a House GOP conference meeting on Friday and a Senate vote on Thursday night, complicates chances for a year-end deal with Democrats and strengthens Democratic efforts to politically batter Republicans.

 

House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., are prepared to accept legislation that combines an extension of the current 4.2 percent employee payroll-tax rate with extended unemployment insurance, and Boehner is set next week to advance such a bill. In meetings this week with their members, the leaders made what staff acknowledged were candidly political arguments for their position.

President Obama and congressional Democrats see GOP opposition to extending the reduced payroll-tax rate and unemployment benefits as a potent political weapon ahead of next year’s election. In signaling they agree to a deal to extend the programs, the GOP leaders are trying to deny Democrats the issue. GOP leadership aides called it impossible to effectively explain opposing a bill that will prevent American workers from an average tax hike of $1,000 annually.

But many Republicans in both chambers view the reduced tax rate as a failed Democratic effort to boost the economy and a drain on Social Security funding. Many are not on board with leadership.

 

“Unless we have the courage right now to address entitlement reform we should not be voting to extend the payroll-tax holiday,” said Rep. Jeff Flake, R-Ariz., after a Friday morning GOP conference meeting in which members voiced opposition to extending the tax cuts. “And we don’t have the courage right now to do it.”

Flake said that leadership misread where the conference stood. “I just think they are wrong on this,” he said.

To appease conservatives, Boehner, according to House aides, is considering adding domestic spending cuts and environmental policy measures to the bill. That will make an eventual agreement with Democrats harder.

McConnell hit an obstacle in a Thursday night vote. Twenty-six of the 47 members of his conference voted against a GOP proposal to extend the payroll tax at its current rate.

 

In what now appears a rare verbal miscue, immediately after meeting with his members on Tuesday, McConnell told reporters that “there's a lot of sentiment in our conference, clearly a majority sentiment, for continuing the payroll-tax relief that we enacted a year ago in these tough times.”

Democrats quickly noted that a majority of Senate Republicans continue to oppose extending the rate and argued Senate Republicans had rebuked McConnell with the vote.

Almost all Republicans on Thursday night also voted against an alternative Democratic proposal that would have extended the tax break and paid for it with a surtax on people with annual incomes of $1 million or more.

GOP aides said that Republican leaders did not pressure members to support the Senate GOP payroll bill. The aides described the measure as intended to provide political cover for members who opposed the Democratic bill but support extending the payroll tax rate in some circumstances. GOP senators likely to face close election races next year, such as Sens. Scott Brown, R-Mass., and Dean Heller, R-Nev., voted for the Republican alternative.

 

 

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