Skip to comments.House kills payroll-tax bill, sets up showdown with Senate
Posted on 12/20/2011 12:14:28 PM PST by SeekAndFind
I guess it wouldn't be Christmas without some brinksmanship all the way to New Year's Eve. Last year that brinksmanship involved the extension of Bush-era tax rates and unemployment benefits. This year, thanks to a very curious reversal, it will be the payroll-tax holiday -- or more precisely, its length:
The House voted Tuesday to disagree with the Senate-passed payroll tax bill, and to call for a House-Senate conference to sort out differences between the bills.
The move is intended to put pressure on Senate Democrats to reconvene and meet with the House over the bill, even as Democrats say the Senate is done for the year.
As predicted by Republican leaders on Sunday, the motion to disagree with the Senate was approved with the support of nearly every Republican. The motion was passed 229-193, and only 7 Republicans voting against it.
And why did House Republicans block the Senate bill? Not to oppose the extension of the tax holiday, which would make some sense. The cut in revenue to the Social Security fund expands the already-significant deficit between revenues and benefit payments in SSA, which means that more money has to come out of the general fund to cover the gap — and that means more deficit spending. That might make sense if the cut produced a burst of economic growth, but just like the Making Work Pay tax cut in Obama’s stimulus package and the Bush withholding-tax reduction in 2008, the payroll-tax holiday failed to produce any such momentum in 2011. It’s another failed gimmick from an administration that has offered nothing but failed short-term gimmicks in place of a responsible economic and regulatory policy.
No, the House blocked this bill because they objected to the temporary nature of the holiday. Actually, that’s not even true, since their preferred position is another yearlong extension of the cut, which is so temporary and inconsequential that it has no macroeconomic impact at all. They’re objecting because it will only extend it for two more months:
House Republicans say a conference is the best way to resolve the differences between the two bills the House bill calls for a year-long extension of the payroll tax holiday and unemployment insurance, and pays for those extensions through reforms to these programs and further cuts to discretionary spending.
The Senate bill, which 39 Senate Republicans supported last week in an 89-10 vote, extends the payroll tax and unemployment insurance for just two months, and pays for those extensions by increasing fees mortgage holders would pay to Fannie Mae and Freddie Mac.
I have a question — do Republicans on Capitol Hill bother to talk to one another? If this package was so objectionable, why didn’t Boehner work with Mitch McConnell to force the demanded compromise in the Senate? Only ten Senators voted against this bill, which means that the overwhelming majority of the Republican caucus gave it the thumbs-up. Under those conditions, Reid’s anger is entirely legitimate. He and McConnell worked out a compromise in which Republicans got the pipeline in exchange for a short-term extension that will get Congress through the holidays, but allows the GOP to push for more in later negotiations. Bear in mind that both parties have taken the same approach on budgeting matters — as they did last year in that bout of brinksmanship.
If the House thinks holding this up after getting overwhelming bipartisan approval in the Senate will win them political brownie points, they’d better take another look at the polls. Obama is moving up incrementally on questions of protecting the middle class, and the GOP now wants to give him the position of fighting for a tax cut that Republicans don’t oppose, but won’t approve, either. If they want to fight for principle in opposing the payroll tax holiday, then this makes sense. If they want to fight to make it permanent so that its limited ability to impact long-term business and budget planning, then it would also make sense. But blowing up a compromise simply because they object to a shorter-term gimmick over a slightly longer-term gimmick is fundamentally unserious.
Update: Because I didn’t make one point clear in this post, a commenter asked a good question:
Sorry Ed, but the average person will take Republicans side on this. A tax cut for a year or a tax cut for 2 months?
Most people will want that year long cut.
Actually, both sides want a year-long holiday extension. The Senate compromise was reached with the understanding that further negotiations would take place to establish it. The House wants to bypass that and get it done now. That’s the only difference between the House and the Senate at this point on the main issue.
Actually, Boehner ought to be livid with Mitch (funny how they use his first name and only Boehner's last) for playing the a$$-kissing RINO. Looks like Mitch is more willing to bow to Reid than to work with Boehner.
Bowing to Reid = working with Boehner.
They are both arguing for a Payroll Tax Cut extension that gives tax cuts to the rich (because they make higher salaries), and which will come back to haunt Boehner, because the Dems know exactly how to use this against him (don’t doubt me).
And then, to offset the loss of SS funds, the bill includes a surcharge on new and refinanced mortgages, which impacts unemployed and retirees as much or more so than any other group of people.
As far as this issue is concerned, Boehner = Reid and neither of them give a damn about the rest of us or the future of this country.
I hate to say this because up to now I have been trying hard to respect Boehner and I believed that he was actually working for Republicans, but as this and other issues proves, he is no better than any of the other congresspigs lined up at the trough.
Reality is a bitch... welcome... you took the correct pill.
Agreed that McConnell made a terrible mistake in not working with the House Reps on a coordinated strategy. McConnell left the House Reps out to dry. But it also raises the question as to why Boehner didn't take the initiative to contact McConnell. I suspect that Boehner did and agreed with the Senate bill until he got a reaction from the House Reps' rank and file. He and Boehner need to be replaced.
Maybe they could have a commission appointed, yep, that worked so well before. This was a trap by the Senate RATS who want to talk about taxes on the rich some more.
I think that crying John was for the senate bill before the house freshmen told him that he was against it.
I read that boner threatened the frosh that he would go to their high roller donors in order to put pressure on them, which pissed them off even more.
Boner wanted the year deal, dirty harry and mitchy said screw him well make him an offer that he won't refuse and then the freshmen TEA party guys made him an offer he couldn't refuse.
They told him, that they'd vote his ass out of the leadership, just like boner did when he and his pal dick armey sold Newt down the river in 1998.
It's no wonder boner cries, he knows if Newt gets elected President, his ass is going to retire and play golf because fat old Newt has a memory like an elephant, and he will get his pound of flesh.
If Boehner and the House wanted 2 months and a fee from Fanny & Freddy they would have passed it that way. Boehner told Reid before the Senate vote. A House-Senate conference is the way these things are handled.
” - - - 7 Republicans voting against it.”
Who were these 7 RINOs?
He should have told McConnell so the Reps wouldn’t have voted for the 2 month deal. The Reps could have stopped it if they had stuck together. I suspect the majority of Reps wanted to go home for XMAS and leave the House holding the bag. We know Lugar, Scott Brown, and some other Reps have been urging the House to pass the Senate bill.