GOP split on payroll tax cut

Republican leaders in Congress are facing a pushback from their rank and file as they try to sell another year of a payroll tax cut championed by President Obama.

The skepticism comes at an intensely difficult time for GOP leaders, who have implored their caucuses to fall into line even as Obama and Democrats have moved to steal their tax-cutting credentials.

Rival bills proposed by Senate Democrats and Republicans both failed in floor votes Thursday night as the two parties battled over how to pay for the extended break. The Senate Republican bill won only 20 votes, less than half the GOP conference.

{mosads}The House Republican Conference will meet early Friday morning for the second time in three days as party leaders work to calm their members with ideas for how to pay for an extension of the payroll tax holiday and unemployment insurance benefits.

The problem for Republicans was highlighted at a Thursday press conference where Speaker John Boehner (R-Ohio) initially struggled to answer the question of whether allowing the payroll tax break to expire would harm the economy.

After first deflecting the question by saying he’s “not an economist,” Boehner later said: “I don’t think there’s any question that the payroll tax relief, in fact, helps the economy.

“You’re allowing more Americans, frankly, every working American, to keep more of their money in their pocket,” the Speaker added. “Frankly, that’s a good thing.”

His comments stood in contrast to those of both veteran and rank-and-file Republicans, who said there was little evidence the payroll tax cut in 2011 had boosted the economy.

“If they could show me a lot of increases in jobs or something, that’s a different matter,” Sen. Orrin Hatch of Utah, the ranking Republican on the Finance Committee, said Wednesday. “But I don’t think they’ve been able to show that.”

Hatch also said he was skeptical that a 2010 measure he sponsored with Sen. Charles Schumer (D-N.Y.), which gave some businesses a payroll tax holiday, had been that effective.

“I’m not convinced that that created a lot of jobs,” said Hatch, who voted against his own party’s proposal to extend the tax break on Thursday night.

Many members, especially freshmen who were not in Congress to vote on the initial payroll tax holiday, remained skeptical.

Freshman Rep. James Lankford (R-Okla.) questioned whether the one-year tax cut had stimulated the economy. 

“Now, I’m not sure how anyone can look at the economy this year, unless you go from the perspective of, this is saved jobs — I don’t know how anyone can look at it and say, gosh, this has been such a stimulative effect or was very effective,” Lankford said. 

On the other side of the aisle, top Democrats on Capitol Hill continued to claim momentum in the tax fight, again citing polling that showed public support for their proposal to pay for expanded payroll tax relief with a surtax on millionaires.

“Republicans realized they were picking the wrong fight by blocking a middle-class tax cut,” Schumer told reporters Thursday. “They’re totally disoriented right now because they’re not used to being on the losing side of a tax debate.”

But, like some of their Republican colleagues, Democratic lawmakers are concerned about the tax cut’s impact on Social Security — with some announcing outright opposition to extending payroll tax relief in any form, and others saying they will reluctantly get on board.

House Minority Leader Nancy Pelosi (D-Calif.) backs the extension, and broke with some of her liberal allies in downplaying its threat to Social Security.

“I do not think that it undermines Social Security,” she said Thursday in her weekly briefing.

Under the Senate Democratic plan for extending the tax rejected Thursday night, workers would receive an expanded payroll tax cut, and employers would also get relief. The break would be offset with a 3.25 percent surtax on annual income above $1 million.

The Republican plan would continue the current two-percentage-point cut for employees — from 6.2 percent to 4.2 — for another year.

The proposal would use an extension of a federal worker pay freeze, and trims to benefits for the wealthy and the federal workforce, to both offset the payroll tax cut and reduce deficits.

The Obama administration on Thursday announced its support for the Senate Democratic plan and its opposition to the Republican framework. But the White House also stopped short of issuing a veto threat to the GOP proposal.

The GOP plan was defeated 20-78, while the 51-49 vote on the Democrats bill failed to win the 60 votes necessary to proceed.

House Republicans are likely to unveil their own proposal on Friday. Majority Leader Eric Cantor (R-Va.) argued in a closed-door meeting on Wednesday that the party risked its historical advantage on taxes if it allowed them to go up on working families.

{mossecondads}Rep. Austin Scott (R-Ga.) had been critical of the plan when Obama proposed it during an address to Congress in September. He signaled he was taking another look now that the GOP leadership was behind it, but he was adamant that it be paid for.

“We’re against raising taxes. We’re also against deficit spending. So again, it’s going to come back to, where is the pay-for?” Scott said.

Across the Capitol, Sens. Joe Manchin (D-W.Va.) and Mark Kirk (R-Ill.), both barely a year into their Senate tenures, went to their chamber’s floor to announce their opposition to any extension in the payroll tax cut.

“I don’t think seniors should be based on a ‘trust us’ policy, that we’ll pay you back,” Kirk added. “And I would actually say even the political vote is to vote against this so that you’re for Social Security.”

“Letting Americans believe that we don’t have to pay for Social Security is wrong. It is dead wrong,” Manchin said. “And I will not vote for it. Period. Under any condition.”

Rep. Elijah Cummings (D-Md.) also expressed concern about the tax cut’s impact on Social Security. 

“As long as it’s a temporary measure, that’s fine,” said Cummings, the ranking Democrat on the House Oversight Committee. “But at the rate we’re going, it will never be temporary.”

But, unlike Manchin, Cummings said he could get behind continuing the tax relief. 

“We’ve got to get this economy moving,” he said. “We’ve got to get people working so they can put money into Social Security.”

This story was first posted at 8:50 Thursday and was updated at 6:52 Friday.