President Obama and Senate Minority Leader Mitch McConnell, R-Ken., pressed House Republicans on Thursday to agree to a two-month extension of the payroll tax cut, even as Speaker of the House John Boehner, R-Ohio, insisted he was ready to negotiate.
During a White House speech, Obama expressed frustration with the standoff over extending this year’s 2-percentage-pont cut in Social Security and Medicare withholding taxes from 6.2 to 4.2 percent. He brought with him a group of people who had written in recent days to the White House Web site describing what they would have to sacrifice without the estimated $40 they would save on an average paycheck from the tax cut. They would save an estimated average of $1,000 per year, assuming an annual salary of $50,000 a year, if the payroll tax cut were extended. Obama noted that taxpayers had written to the White House about giving up trips to see ailing relatives, taking their children out for a pizza, and buying enough heating oil to keep their family warm in the wintertime.
“Enough is enough,” said Obama. “The people standing with me today can’t afford any more games. They can’t afford to lose $1,000 because of some ridiculous Washington standoff. The House needs to pass a short-term version of this compromise, and then we should negotiate an agreement as quickly as possible to extend the payroll tax cut and unemployment insurance for the rest of 2012. It's the right thing to do for the economy, and it’s, most importantly, the right thing to do for American families all across the country.”
McConnell also turned up the pressure on Boehner and his fellow House Republicans. He and Senate Majority Leader Harry Reid, D-Nev., had negotiated a compromise on a way to pay for extending the tax cut for just two months through increased fees on mortgages and agreed to resume negotiations to extend the payroll tax cut through the rest of the year when Congress returns from recess in January. As part of the deal, Reid agreed to include a provision in the bill to require Obama to make a decision on the Keystone XL oil pipeline from Canada to Texas within two months. The Senate bill passed 89-10 on Saturday (see House Action Uncertain on 2-Month Payroll Tax Cut).
“The House and Senate have both passed bipartisan bills to require the President to quickly make a decision on whether to support thousands of U.S. manufacturing jobs through the Keystone XL pipeline, and to extend unemployment insurance, the temporary payroll tax cut and seniors’ access to medical care,” said McConnell in a statement Thursday. “There is no reason why Congress and the President cannot accomplish all of these things before the end of the year. House Republicans sensibly want greater certainty about the duration of these provisions, while Senate Democrats want more time to negotiate the terms. These goals are not mutually exclusive. We can and should do both. Working Americans have suffered enough from the President’s failed economic policies and shouldn’t face the uncertainty of a New Year’s Day tax hike. Leader Reid should appoint conferees on the long-term bill and the House should pass an extension that locks in the thousands of Keystone XL pipeline jobs, prevents any disruption in the payroll tax holiday or other expiring provisions, and allows Congress to work on a solution for the longer extensions.”
Boehner also pressed for the appointment of a conference committee during remarks he delivered Thursday morning before Obama’s speech. “Yesterday, I spoke with President Obama,” he said. “I urged him to call on Senator Reid to work with us to finish this bill that will provide for one year of tax relief for American workers. I told the President there’s one big reason why we need to do a full-year, and that’s jobs. A one-year bill—like the President requested and like the House produced—is simply better for jobs and better for our economy. A one-year bill provides, on average, about $1,000 for American workers, as opposed to the Senate bill, which would provide a measly $166. As importantly, a one-year bill would provide certainty for American employers as they begin to plan for next year. A two-month extension only perpetuates the uncertainty that too many employers already have in dealing with the economy and what’s coming out of Washington.”
Boehner noted that he used to run a small business. “I can tell you that the language in the Senate bill will hurt small businesses,” he said. “The Senate [bill] only goes for two months, but businesses send their taxes in and write the check—I used to write the check to the IRS—but it’s done on a quarterly basis. And so, you’re going to have a couple of months of this, and another month of this, trying to figure out what your obligation is is going to be difficult. And secondly, the paperwork requirements and the programming requirements contained in the Senate bill will make it virtually impossible for those who provide payroll services to do the job that employers hire them to do. The fact is, we can do better. Americans are still asking the question, ‘Where are the jobs?’ It’s time for us to sit down and have a serious negotiation, solve this problem, so that American workers don’t see their taxes go up in January.”
Boehner was supported by House Majority Leader Eric Cantor, R-Va., who reiterated the House Republicans’ position that the tax cut must be passed for one year before the end of this year.
“As the Speaker said, it is our position that we want to make sure we provide some certainty to the working people of this country that their taxes are not going to go up for an entire year,” said Cantor. “Unfortunately, that view, although it is shared, is not being implemented or proposed to be implemented by the Senate proposal. We are here and we want to solve the problem. Frankly, given where the parties are, there is not a big difference between our positions. It all comes down to the pay-fors, the budgetary impact of the extension of this tax holiday.”
Cantor offered to let Obama’s dog Bo sit in on the negotiations. “I saw the President out yesterday doing his Christmas shopping,” he said. “I saw he brought his dog with him. You know, we are here. He can bring his dog up here. We are pet-friendly. Again, it will not take a long time. We can probably resolve the differences within an hour. That is why we are here to say, let's do this. Let's avoid any more uncertainty. Let's try and avoid another one of these difficult moments within 60 days so we can get on about the business of putting in place factors for a better economy and job creation.”
Later in the day, House Ways and Means Committee Chairman Dave Camp, R-Mich., said he would introduce a bill Friday to provide a two-month extension of the payroll tax holiday, unemployment benefits, reimbursements to doctors treating Medicare patients, and the Temporary Assistance for Needy Families welfare program.
“We heard the concerns of America’s job creators loud and clear, and we have taken the responsible action to address their needs,” Camp said in a statement. "Despite the Senate’s refusal to return to work and negotiate a longer-term bill in good faith with the House, we will not let their vacation harm these employers nor Americans struggling in this weak economy. This legislation fixes a critical flaw in the hastily passed Senate bill, which failed to provide employers with a workable mechanism with which to implement a partial-year payroll tax holiday.”
Camp pointed out that a number of small business groups, such as the National Federation of Independent Business, the Associated Building Contractors, the National Roofing Contractors Association, the Small Business Entrepreneurial Council, the Associated General Contractors, and the National Payroll Reporting Consortium, had all stated the Senate bill would add complexity, confusion and costs to employers, thereby harming job creation.
“However, a two-month fix is just that – a short-term patch,” said Camp. “America’s employers, families and Medicare doctors deserve long-term solutions. When the Senate returns to work in January, we must finish the job and provide greater certainty for these policies.”
During his speech earlier in the day, Obama pointed to the growing frustration with inaction on the payroll tax cut (see Boehner under Pressure on Payroll Tax Cut Extension). Extended unemployment benefits are also scheduled to run out at the end of the year, and the so-called “doc fix” to prevent Medicare reimbursement for physicians from plunging 27 percent is also scheduled to expire.
“What’s happening right now is exactly why people just get so frustrated with Washington,” said Obama. “This is it; this is exactly why people get so frustrated with Washington. This isn’t a typical Democratic-versus-Republican issue. This is an issue where an overwhelming number of people in both parties agree. How can we not get that done? I mean, has this place become so dysfunctional that even when people agree to things we can't do it? It doesn’t make any sense.”