House GOP seeks federal pay freeze as part of payroll tax fight

The GOP-led House is ushering forward bills to freeze federal employee pay and ban welfare recipients from accessing their benefits through ATMs at casinos or strip clubs -- moves intended to give Republicans leverage for including those proposals in negotiations to extend President Obama’s payroll tax holiday for the remainder of the year.

Democrats have been cool to such measures and are likely to dismiss them in talks to extend the payroll tax break. Negotiators met Wednesday to resolve the standoff on the tax break, which expires Feb. 29, and are expected to meet again Thursday.

Obama pushed the tax break as a way to give workers an extra $20 a week, on average, by reducing the amount they pay toward Social Security. Both Republicans and Democrats want the tax break to continue through 2012, but have been unable to find a way to pay for it to ensure funds to the retirement account can be replenished.

GOP proposals to change the unemployment insurance program have become part of the standoff. Republicans want to reduce the amount of time jobless Americans are eligible for benefits. They also want to want to require the unemployed to enroll in GED programs if they have not graduated from high school. Another provision would allow states to drug-test those who receive unemployment benefits.

On Wednesday, the House approved a measure that bars the use of welfare debit cards at casinos, strip clubs and liquor stores. Lawmakers have cited a Los Angeles Times story reporting that about 1% of the benefits allocated for California’s welfare recipients was spent out of state, some at shops at or near casinos. States that fail to ban such activity would be penalized.

Republicans in the House also sought to freeze federal employee pay, confronting Obama’s proposal to lift the federal pay freeze that has been in effect since fiscal year 2010 and give federal workers a half-percent pay hike.

These issues had been among those that held up a resolution to the payroll issue last year, when Congress failed to reach agreement on extending the payroll tax break through 2012. Instead, Congress compromised on the short-term extension through February. Democrats are likely to fight those provisions again this year.

Democrats had wanted to pay for the costs of the payroll tax break with a surtax on those earning beyond $1 million annually, a proposal the GOP rejected.

The Congressional Budget Office said this week that extending the payroll tax break would boost growth of the nation's gross domestic product by about half a percentage point in 2012.

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