House, Senate Show No Give in Payroll Tax Fight

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House, Senate Show No Give in Payroll Tax FightWASHINGTON (AP) - House and Senate leaders traded demands Wednesday but remained mired in a bitter holiday-season stalemate that is threatening 160 million workers with Jan. 1 tax increases and millions of the long-term unemployed with an end to their benefits.

In a letter, Senate Majority Leader Harry Reid urged Speaker John Boehner to bring House lawmakers back to Washington and approve a bipartisan measure the Senate approved overwhelmingly last weekend. That bill would extend the payroll tax cut and jobless benefits for two months, giving bargainers time to agree to a more expensive, yearlong measure.

"Because we have a responsibility to assure middle-class families that their taxes will not go up while we work out our differences, we must pass this immediate extension first," wrote Reid, D-Nev.

Minutes later, Boehner, R-Ohio, and other top House Republicans invited reporters into a meeting where they urged Reid to bring senators back to town so they can negotiate over a yearlong extension of the tax cut and jobless benefits. The bill would also postpone a scheduled Jan. 1 cut of 27 percent in payments to doctors who treat Medicare patients.

"All we're asking for is to get Senate members over here to work with us to resolve our differences so we can do what everybody wants to," Boehner said.

President Barack Obama and leaders of both parties want to extend the tax cuts and jobless benefits and prevent the cut in doctors' reimbursements for an entire year. Most lawmakers have left Washington for the Christmas and New Year's holiday, but could quickly return to vote on any agreement.

The back and forth underscored a pressure-packed partisan fight, being waged on the eve of a presidential and congressional election year, in which neither side is showing any indication of give.

In a moment of political theater, Democrats tried to get the House to consider the two-month extension of the payroll tax cut as the chamber convened for a ceremonial session at which no formal business was scheduled. But acting speaker Rep. Michael Fitzpatrick, R-Pa., adjourned the chamber and walked out.

"Mr. Speaker, you're walking out. You're walking away just as so many Republicans have walked away from middle-class taxpayers" and others, Rep. Steny Hoyer of Maryland, the No. 2 House Democrat, shouted to an empty chair where the House presiding officer sits.

Republicans also came under pressure from their own usual allies when an opinion article on the Wall Street Journal's conservative editorial page accused the GOP of botching the fight over the payroll tax cut.

"Republicans would do best to cut their losses and find a way to extend the payroll holiday quickly," the editors wrote.

On Tuesday, the House voted 229-193 to kill the Senate measure. Afterward, Obama signaled he'll use his presidential megaphone to try to force Republicans controlling the House into submission.

"Now let's be clear," Obama said at the White House. "The bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on Jan. 1. The only one."

The Obama campaign promptly took to Twitter and Facebook to fight it out. With their candidate's poll numbers rising, Democratic operatives seemed almost giddy at the prospect of a prolonged battle.

Republican lawmakers relished the battle as well, though some of them are too inexperienced to know that presidents - regardless of party - usually win such high-profile fights, like Bill Clinton did over a 1995-96 government shutdown or George W. Bush did in skirmishes on anti-terror policies.

House Republicans instead rallied around a plan passed 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.

If legislation isn't passed by New Year's Day, payroll taxes will go up by almost $20 a week for a worker making a $50,000 salary. Almost 2 million people could lose unemployment benefits as well, and doctors would bear big cuts in Medicare payments.

Given Obama's remarks and Reid's refusal to negotiate, it was unclear what leverage Republicans had in the year-end standoff. It appeared likely the partisan disagreement could easily persist past Christmas and into the final week of the year.

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granaryst

Obama and thugs are giving us the largest standard of living decrease in history. He took the worst recession since jimmy carter and made it into the worst since the Great Depression.

December 22 2011 at 7:41 PM Report abuse +1 rate up rate down Reply
Nancy

Can you not see thru the biased media? Passing a bill for two months with no cuts...this is the reason we are still in this mess...Good ol' Obama, just doing what he does--campaigning...he is no more interested in the middle class than the man in the moon! Why don't the Dems find ways to pay for the bill and cut the pork AND have a bill for more than two months...what a joke....

December 22 2011 at 3:45 PM Report abuse +1 rate up rate down Reply
2 replies to Nancy's comment
indisposed99999

It was done for 2 months to buy time to come back and do it for the full year. So, its not exactly true that Obama and the democrats only want to extend it for 2 months.

however, the whole idea is moronic. If you extend it for a year, you just set yourself up for a fight this time next year over extending it again. And, yes, the rhetoric will be exactly the same, "this isn't the right time to be raising taxes on the middle class", etc.

Instead, we should be having a rational discussion among grownups over whether we should permanently be lowering the payroll tax or raising it. The argument basically boils down to WHO should bear a greater burden for entitlement programs. Lowering the payroll tax simply increases the amount the government must borrow to fund these programs (to be clear, the SS Trust Fund is and always has been a sham designed to shield the long-term costs of these programs). That debt will need to be repaid through future income taxes. Since the top 10% of wage earners pay roughly 80% of income taxes, the net effect of a payroll tax cut is to shift a larger percentage of the costs of Medicare and SS from the middle class to the upper class.

So, in that narrow sense, Obama is trying to cut taxes on the middle class. Of course, so has every president since Reagan, which is why the top 1% paid 18% of all income taxes in 1981 vs. 40+% today.

December 22 2011 at 4:27 PM Report abuse rate up rate down Reply
2 replies to indisposed99999's comment
theycallmeroy2

In 1952, payroll taxes of SS - 9.7% of federal revenue. In 2010. payroll taxes of SS -400% of federal revenue.
Just looking for creative ways to pay for it. In 1952, corp tax as % of GDP=32.1%. In 2010, corp tax % of GDP= 1.3%. So, raise the FICA tax on large corps by1/2%. From 6.25 to 6.75% for five years. Rake in about 30 billion a year x 5= 150 billion. They won't miss it. :--) And you're right again. Next year will be the same story. If they're having this much trouble with this one, think of the massive problems cutting 2 trillion down the road. Cause I just don't think the revenue is going to come from keeping millionaires off food-stamps. Should I hit the deck? Now, I only have " one "reference on this, and that's the Congressional Research Service.

December 22 2011 at 6:40 PM Report abuse rate up rate down
theycallmeroy2

Ok, maybe the rake of 30 billion might be a tad high on wage base. But, there's still a rake motion.

December 22 2011 at 7:02 PM Report abuse rate up rate down
granaryst

Actually he is interested in the middle class. He and his thugs are interested in demolishing it.

December 22 2011 at 7:39 PM Report abuse -1 rate up rate down Reply
hustonlaw

Of course, the only real question is when the President will cave in to Republican demands. The lesson from all of this simply reinforces what we all should know by now: NEVER vote for a Republican; not under any circumstance.

December 22 2011 at 2:23 PM Report abuse +1 rate up rate down Reply
Mary and Alex

God Helps those who help themselves, everybody on the gravy train the party's over.

December 22 2011 at 12:35 PM Report abuse rate up rate down Reply
Gumby

Now everyone see what high Big Oil Prices and rising health costs do to our budgets at all levels.. I hope that everyone understands that it is everyones's responsibility to see that we dont waste way too much money again. I am not trying to say what you did wrong yesterday.. It is every one of your responsibilty to see what you can do to help minimize the nuttiness happening around here in America!!

December 22 2011 at 12:24 PM Report abuse rate up rate down Reply
theycallmeroy2

Anytime you start taxing or penalizing other people for a short fall or a shore up, the program is changed. SS, until recently was perceived as a funded program. Now, it's becoming a welfare program. The tax issue changed that.

December 22 2011 at 9:33 AM Report abuse rate up rate down Reply
2 replies to theycallmeroy2's comment
theycallmeroy2

Here's an example. Both sides are eyeing Fannie and Freddie. New homeowners would see their payment go up, to fund the tax cut. Now you're having home owners fund SS. The program changed.

December 22 2011 at 9:46 AM Report abuse rate up rate down Reply
indisposed99999

It was never perceived as a "fully funded" program. It was always known that once the baby boomers started retiring, the revenues would be insufficient to fund benefits at that time. The whole SS Trust Fund was created as an accounting gimmick designed to hide the true problem, by allowing the program to show an "asset" (IOUs from Treasury) that could offset unfunded liablities (promises of future payments to people).

The problem was that the "asset" was the equivalent of taking $5 out of your wallet, spending it and then replacing it with a note "I owe you $5, love me".

December 22 2011 at 11:01 AM Report abuse rate up rate down Reply
1 reply to indisposed99999's comment
theycallmeroy2

I understand.

December 22 2011 at 5:14 PM Report abuse rate up rate down
nvmaven

THE REPUBLICANS DID THE LAST DEPRESSION DURING THE EARLY 30S LOOKS LIKE THEY PLAN TO DO IT AGAIN. PEOPLE SHOULD PROTEST IN FRONT OF THEIR PLACE WHERE THEY LIVE, THEN MAYBE THEY WILL GET THE MESSAGE FROM 150 MILLION US PEOPLE. AND DO THE RIGHT THING.

December 22 2011 at 7:26 AM Report abuse +1 rate up rate down Reply
1 reply to nvmaven's comment
billyjoeobama

Would you care to "splain" how they did that? The right thing to do would have Obama step down and have Biden go with him and have Boehner take the reigns till we get a real leader with a set of balls.

December 22 2011 at 8:16 AM Report abuse -1 rate up rate down Reply
4 replies to billyjoeobama's comment
dwight

Tell me how bankrupting social security with this tax cut is a good thing.. Voters should be outraged at this..My opinion is they can do better.. Hey !! Mr. President , How is this for a Idea instead of a $4 million vacation in Hawaii for christmas Why not stay at the white house and on top of that How about all elected officials reduce their pensions and not take pay until they balance the budget...

December 21 2011 at 11:20 PM Report abuse rate up rate down Reply
1 reply to dwight's comment
jpark377

They have no interest in balancing budgets: I think those do-nothing committees have proven that. Their only interest is self-promotion, and they do it with tons of pork (those stupid-azz member items), and shameless pandering to their base. At this point, the country as a whole will never come first. Yes, you have a very valid point: which is it, Mr. Shameless Politician- is Social Security broke; or is it OK, and this tax cut will have no long-term consequences.Clearly, it can't be both cases.

December 22 2011 at 12:01 AM Report abuse +2 rate up rate down Reply
jhrooney

It would be nice if the bill was a just a tax bill. Both parties keep adding pet projects and then they wonder why it won't pass. A paux on every member of both houses of congress. Maybe it is time to form the anti incumbent party.

December 21 2011 at 10:37 PM Report abuse +1 rate up rate down Reply
spiguyone

Just vote on extending the payroll tax cut & unemployment benefits if everyone agrees ! No addendums or add ons then negotiate on how to pay for it ! Both parties are BS but the tea party republicans are killing the way we function.

December 21 2011 at 8:03 PM Report abuse +2 rate up rate down Reply
1 reply to spiguyone's comment
jpark377

"The way we function?"- Perhaps the way we functioned is the real problem that the Tea Party is bringing to the fore. $17 trillion in debt; and they had all year to address this tax cut extension. A one-year extension is apparently too long for Chuck Schumer and his bunch. How can we even say that we're some type of superpower when we consider 60-day extensions to tax law as a viable government policy? That's no way to run an economy of this size.

December 21 2011 at 11:52 PM Report abuse -2 rate up rate down Reply