House approves payroll tax cut extension, with strings attached

Speaker of the House John A> Boehner speaks with members of the Republican leadership on Capitol Hill.
(Alex Wong / Getty Images)

A payroll tax cut package engineered by House Speaker John A. Boehner was overwhelmingly approved by Republicans despite a veto threat from President Obama, escalating a year-end showdown over extending the benefit for 160 million American workers.

Passage of the measure Tuesday was a momentary victory for the speaker, who has struggled to get reluctant Republicans on board for the tax break, which puts a $1,000 in average workers’ pockets. It was approved 234-193, with 224 Republicans and 10 Democrats.

But the Republican win is expected to be short lived, as the bill has limited chances in the Senate, where Democrats oppose the GOP priorities that Boehner added to the bill to win Republican votes, including one to accelerate the controversial Keystone XL pipeline.


The tax break expires on Dec. 31, and Senate Majority Leader Harry Reid (D-Nev.) warned Boehner in a phone call that GOP leaders have spent too much time catering to their conservative flank rather than negotiating with Democrats on a compromise.

“This is what I told him: we are not going to finish the work of our country this year unless we work together,” Reid said. “They are wasting time catering to the ‘tea party’ when they should be working with Democrats on a bipartisan package that can pass both houses.”

To bring Republicans to the table, Democrats have slow-walked an unrelated year-end spending bill that is needed to keep the government running, preventing the GOP-led House from finishing its work and leaving town for the holidays.

Such a strategy is risky, as Congress must approve the funding bill or the federal government will shut down on Friday. But the leverage proved irresistible. Obama, in strategizing with Reid over the weekend, insisted the bills be linked. Obama said that “nothing gets done until everything gets done,” according to a senior administration official.

Republicans were caught off guard by the move, and thought they had a handshake agreement with Democrats on the spending bill. But Democrats said unresolved issues remained – including provisions on abortion, travel to Cuba and funding levels for the Commodity Futures Trading Commission, which plays a role in Wall Street regulation.

“Here we are with a government shutdown pending Friday, a deal already made, and I think it’s appropriate to ask the president and the majority leader why they want to undo a deal that was already made,” said Sen. Mitch McConnell of Kentucky, the Republican leader, “and threaten to shut down the government here the week before Christmas.”

The House vote on the payroll tax package underscored the work Boehner has done to bring unity to an often divided GOP. At a closed-door meeting before the vote, only one Republican rose to publicly question the policy, those familiar with the session said.

Conservative Rep. Jason Chaffetz of Utah delivered a message to his peers that noted the hard-scrabble politics before them.

“I stood up and said, ‘I’m really good at voting no. I spent two years mastering that. This has a lot of positive in it,’” Chaffetz said. He said he would go on to vote for the package.

The payroll tax holiday, which has been in place for 2011, reduces the Social Security contribution workers pay from 6.2% to 4.2%. Lost contributions to the Social Security trust fund would be replenished – under the GOP proposal, they would be backfilled by spending cuts elsewhere in the budget. The chief actuary for the retirement system has said the fund would be unaffected.

In attracting Republicans by tacking GOP priorities to the bill, however, Boehner pushed away Democratic votes.

One by one, Democrats spoke during Tuesday’s debate against the GOP provisions in the payroll tax package -– including the Keystone provision the president vowed to veto.

Rep. Nancy Pelosi (D-Calif.), the minority leader, acknowledged the Keystone project has supporters among Democrats and their allies in the labor unions. They agree with Republicans it will create jobs. But Pelosi said Republicans should not use the tax cut to advance the project.

“The Republicans are trying to change the subject,” Pelosi said. “Let’s have that debate on another day.”

To pay for the bill, Republicans shun Obama’s proposal to impose a surtax on millionaires. Instead they propose reducing long-term unemployment insurance, cutting federal workers’ pay and asking upper-income seniors to pay more for Medicare, among other provisions.

The unemployment insurance cuts, in particular, drew emotional protests, and Democrats said more than 3 million jobless Americans would lose their benefits under the GOP proposal.

“The unemployed are not people who can ante up $10,000 bets or spend lavishly at Tiffany’s,” said Rep. Sander Levin (D-Mich.), in a dig to the GOP presidential candidates – Mitt Romney mentioned making such a bet during last Saturday night’s GOP debate, and Newt Gingrich had an account at the jeweler. “Republicans are out of touch with the families of America.”

Democrats took particular aim at the provision that allows states to drug test those receiving jobless benefits.

“I don’t see anyone in the Republican majority demanding drug testing for folks who receive oil and gas subsidies,” said Rep. James Clyburn (D-S.C.).

Republicans explained that their proposal was trimming the costs of the jobless benefits and ensuring the tax package was fully paid for.

Rep. Dave Camp of Michigan, who led the floor debate, said a vote against the Republican proposal was a vote to raise taxes on ordinary Americans on Jan. 1.

The payroll tax package now volleys to the Senate, where neither the Democratic nor Republican proposal has been able to pass.