On the ropes, GOP lawmakers seek counterpunch in fight over taxes

In crafting a year-end package to extend the payroll tax cut, House Republicans are looking to wrangle a victory out of a losing issue for the party.

Under intense pressure from President Obama, GOP leaders have decided to back one of the centerpieces of his jobs plan. But they have yet to find a combination of sweeteners and offsetting spending cuts that will persuade their rank and file to endorse an idea many of them have criticized.

{mosads}Without a firm proposal, House Republicans have pushed back a vote on the payroll tax until next week, and they will discuss the vexing issue in a conference meeting Wednesday for the third time in a week. The delay means the House and Senate will have little time before the holiday adjournment to agree on a measure extending the tax cut and unemployment insurance, and fixing the Medicare reimbursement rate for doctors.

“Year-end packages are always difficult. … It isn’t anything new,” said Rep. Tom Price (Ga.), the chairman of the Republican Policy Committee.

In previous policy fights over government spending and the debt ceiling, the GOP leadership has pushed to act early and pass legislation that can serve as a marker in bipartisan negotiations. But unlike those earlier debates, the underlying payroll tax measure contains no core Republican priorities, like spending cuts, making it easier for leadership to woo wary members, especially conservatives.

Instead, House Speaker John Boehner (R-Ohio) and Majority Leader Eric Cantor (R-Va.) have proposed to attach unrelated bills to attract conservatives, such as legislation to speed an approval decision for development of the Keystone XL oil sands pipeline and to delay implementation of environmental regulations. They are making a broader argument that preventing a tax increase on working Americans is central to the GOP brand.

So far, it has been a tough sell.

“The riders are great, I love the riders, but the key is the extent to which we are mortgaging our future,” said Rep. Jeff Flake (R-Ariz.), who remains one of the conference’s most outspoken critics of extending the payroll tax cut.

Aides say Republican leaders are looking for ways that members can claim a win on the issue, whether it is by demanding that the tax holiday be paid for or by insisting on reforms and offsetting spending cuts for unemployment insurance benefits. The Keystone and deregulatory measures are aimed at that purpose, but there is concern they won’t be enough to win over reluctant lawmakers.

A group of 52 GOP freshmen is pushing the party leadership to consider corporate tax repatriation, which would allow American companies to bring offshore profits back to the U.S. at a temporarily lower tax rate. Cantor and Majority Whip Kevin McCarthy (R-Calif.) are supportive of trying to include the measure in a year-end package, but Boehner and Rep. Dave Camp (R-Mich.), chairman of the Ways and Means Committee, prefer to deal with repatriation in a broader tax overhaul next year.

“We are working with our members to find a path forward to ensure taxes aren’t increased on anyone and find resolution on the other end-of-the-year items in a package that can garner 218 votes for passage,” a House GOP leadership aide said. “Whether it be repatriation, which was included in our jobs plan and has bipartisan support, or another item, the goal is to find support among our members.”

Obama, channeling Theodore Roosevelt during a speech in Kansas Tuesday, sought to use his remarks as a rallying cry for his battle against Republicans.

{mossecondads}“Just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune,” Obama said. “Their philosophy is simple: We are better off when everyone is left to fend for themselves and play by their own rules. I am here to say: They are wrong.”

The Senate isn’t moving any faster toward a resolution to the year-end issues. 

Majority Leader Harry Reid (D-Nev.) said Tuesday that the Senate would probably vote Friday on the latest Democratic payroll tax plan, which includes a couple of concessions to Republicans but retains a surtax on millionaires that the GOP generally opposes. The bill is unlikely to pass, and its failure could hasten negotiations between the two chambers on a compromise.

Sens. Susan Collins (R-Maine) and Claire McCaskill (D-Mo.) unveiled their own compromise proposal on Tuesday that exempts business income from the tax on the wealthy, but the Senate GOP leader, Mitch McConnell (Ky.), and other Republicans said it wasn’t enough to win their support.

Because tax legislation must originate in the House, the expectation is that the eventual House GOP bill will serve as a vehicle for a final deal next week. Boehner has said he wants the House to finish its business for the year by Dec. 16.

— Bernie Becker and Alicia M. Cohn contributed to this report.