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House rejects payroll tax cut; Obama's vacation on hold

By Andrew Taylor

Associated Press

LAST UPDATED: 11:31 a.m. HST, Dec 20, 2011

WASHINGTON >>The House rejected legislation to extend a payroll tax cut and jobless benefits for two months, drawing a swift rebuke from President Barack Obama that Republicans were threatening higher taxes on 160 million workers on Jan. 1.

Obama, in an appearance in the White House briefing room after the House vote today, said the two-month compromise is the only way to stop payroll taxes from going up by two percentage points.

"Now let's be clear," Obama said in a surprise appearance in the White House briefing room. "The bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on January 1st. The only one."

Obama said failure to pass the Senate version of the payroll tax cut extension could endanger the U.S. economic recovery, which he described as "fragile but moving in the right direction."

House Republicans controlling the chamber want instead immediate negotiations on a year-long plan with the Senate — where the top Democrat again ruled out talks until the House passes the stopgap measure.

"President Obama needs to call on Senate Democrats to go back into session ... and resolve this bill as soon as possible," said House Speaker Boehner, R-Ohio. "I need the president to help out."



The conflict over the payroll tax is affecting President Obama's plans to vacation in Hawaii with his family. Obama has said he will stay in Washington until Congress passes the payroll tax extention.

If Congress doesn't break the stalemate and pass a bill by the end of the year, payroll taxes will go up by 2 percentage points for 160 million workers on Jan. 1. Almost 2 million people could lose unemployment benefits in January as well, and doctors would bear big cuts in Medicare payments.

The House vote, 229-193, kicks the measure back to the Senate, where the bipartisan two-month measure passed on Saturday by a sweeping 89-10 vote. The Senate then promptly left Washington for the holidays. Senate Majority Leader Harry Reid, D-Nev., says he won't allow bargaining until the House approves the Senate's short-term measure.

"I have been trying to negotiate a yearlong extension with Republicans for weeks, and I am happy to continue doing so as soon as the House of Representatives passes the bipartisan compromise to protect middle-class families, but not before then," said Senate Majority leader Harry Reid, D-Nev.

The House vote caps a partisan debate on Obama's jobs agenda, which has featured numerous campaign-style appearances but little real bipartisan negotiation, other than Senate talks last week that produced the two-month extension.

The Senate's short-term, lowest-common-denominator approach would renew a 2 percentage point cut in the Social Security payroll tax, plus jobless benefits averaging about $300 a week for the long-term unemployed, and would prevent a 27 percent cut in Medicare payments to doctors. The $33 billion cost would be financed by a .10 percentage point hike in home loan guarantee fees charged by mortgage giants Fannie Mae and Freddie Mac, which the administration says would raise the monthly payment on a typical $210,000 loan by about $15 a month.

The House passed a separate plan last week that would have extended the payroll tax cut for one year. But that version also contained spending cuts opposed by Democrats and tighter rules for jobless benefits.

Both the House and Senate bills included a provision designed to force Obama to make a decision on construction of the controversial Keystone XL pipeline, which would deliver up to 700,000 barrels of oil daily from tar sands in Alberta, Canada, to refineries in Texas. The provision requires him to issue the needed permit unless he declares the pipeline would not serve the national interest.

Democrats and the White House had reversed course and accepted GOP demands on Keystone, which contributed to sweeping GOP support for the Senate measure. The White House signaled that Obama would block the project.

Until this weekend, it was assumed that Boehner had signed off on the Senate measure. After all, it was agreed to by Boehner's trusted confidante, Senate GOP Leader Mitch McConnell of Kentucky. Boehner declined on several occasions Friday to reject the idea.

But rank-and-file House Republicans erupted in frustration at the Senate measure, which drops changes to the unemployment insurance system pressed by conservatives, a freeze in the salaries of federal workers and cuts to President Barack Obama's health care law.

Also driving their frustration was that the Senate, as it so often does, appeared intent on leaving the House holding the bag — pressuring House lawmakers to go along with its plan. Tuesday's vote technically puts the onus back on the Senate — but also invites a full-blown battle with Obama, whose poll numbers have inched up during the battling over his jobs initiative.

Both sides were eager to position themselves as the strongest advocates of the payroll tax cut, with House Republicans accusing the Senate of lollygagging on vacation and Senate Democrats countering that the House was seeking a partisan battle rather than taking the obvious route of approving the stopgap bill to buy more time for negotiations.

"If you say you want to do this for a year, put your vote where your rhetoric is," said Rep. Jeb Hensarling of Texas, a member of the House GOP leadership. "If you're not willing to work over the holidays, admit to the American people that you're not willing to work over the holidays."

"Right now Americans want two things from their Congress: middle class tax relief and compromise," said Rep. Steve Israel of New York, chairman of the House Democrats' fundraising committee. "House Republican partisanship failed on both counts."

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hnlstar808 wrote:
extention? should it be EXTENSION. someone needs to do spellcheck.
on December 20,2011 | 07:32AM
LanaUlulani wrote:

These clowns FAIL to divulge that if this bill passes it will allow the U.S. government to gouge home owners and home buyers and will last for the life of the loan. This applies to those who refi too. Especially to Hawaiians who are first-time home buyers!

In dollar amounts an extra $360 per year in fees for a $200,000 mortgage. An extra ~ $720 per year in added fees for a $400,000 mortgage. This is an extra fee YEARLY for the LIFE OF THE LOAN!

So for now at least... glad this bill is STALLED for everyone's sake!!!!!!!!!!!!!!!!!!!!

on December 20,2011 | 07:42AM
inlanikai wrote:
Why dilute the political posturing with the facts? :)
on December 20,2011 | 08:00AM
KeithHaugen wrote:
The Republicans are out to get us .... or, is Boehner doing this just to keep the President from spending Christmas in Hawai`i with his family? In either case, I hope everyone will remember this until the next election.
on December 20,2011 | 08:22AM
livinginhawaii wrote:
I'm taking bets that Air Force One will be arriving in Honolulu sometime within the next week at the bargain travel rate of $1,200,000.
on December 20,2011 | 12:17PM
HD36 wrote:
They rent an extra seven houses nearby to guard the emperor.
on December 20,2011 | 06:19PM
control wrote:
Do people understand that this a phoney tax cut? This is the money that goes towards your social security. This means less money is being paid into the social security system. We are robbing our own retirement. Just another phoney republican shell game - take from peter to pay paul and then pretty it up as a tax cut.
on December 20,2011 | 12:29PM
frontman wrote:
GREAT news............................a few more days with less traffic jams so he can get a shaved ice. Go to your home state, Chicago.
on December 20,2011 | 01:08PM
entrkn wrote:
I don't make much but I will be happy to pay an extra $40 per month if every person and business with gross income over $100,000 paid commensurately more tax to save America.
on December 20,2011 | 01:34PM
HD36 wrote:
They already do.
on December 20,2011 | 06:18PM
lee1957 wrote:
Gas up the plane!
on December 20,2011 | 02:28PM
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