Republicans caught between a tax break and a hard place

When President Obama called for extending the payroll tax cut for workers during an address to Congress three months ago, only a few Republicans stood to applaud.

The head of the House GOP campaign arm called the tax breaks a “horrible idea.” Conservatives likened it to “robbing Peter to pay Paul” and piling onto the national debt.

Now, with American workers facing an average $1,000 tax increase on Jan. 1, GOP leaders in Congress are engaged in a message makeover. They are struggling to convince their rank-and-file lawmakers that blocking Obama’s proposed tax break would be politically toxic, not to mention a breach of the party’s decades-old commitment to cutting taxes.

The prospect of a split within the party’s ranks, so soon after Republican-led efforts to preserve tax breaks for wealthier Americans last year, has presented an opening that Democrats are trying to exploit for maximum political gain.

“Republicans are giving themselves whiplash on the issue of taxes: Republicans have one position on taxes for the wealthy and another position when it comes to everyone else,” said Sen. Charles E. Schumer (D-N.Y.), a chief campaign strategist for Democrats. “Republicans have had the advantage on tax issues over Democrats, but that is changing.”

The narrative has left GOP lawmakers bristling when confronted with the story line that Democrats, not Republicans, are fighting the good fight over tax breaks for working Americans.

“That’s certainly false,” said Rep. Frank Guinta, a Republican freshman from New Hampshire who wants to continue the payroll tax break if it is paid for with budget cuts elsewhere. “Democrats have made a pretty good argument for that, but that’s their opinion.”

Rep. Trent Franks (R-Ariz.), a leading House conservative, barely hid his displeasure with the theme.

“They’re gaining some ground with the less informed,” Franks said. Does this drive him nuts? “It does.”

House Speaker John A. Boehner (R-Ohio) sought to thwart the Democrats’ effort to write a new chapter in political tax history, using his credentials as a low-tax leader and an everyman son of a tavern owner.

“Listen, I’ve got 11 brothers and sisters on every rung of the economic ladder, all right?” Boehner said. “The fact is that Republicans are trying to do everything we can to allow American families and small businesses to keep more of what they earn, to try to get this government off the backs of employers so that they can begin to hire people.”

Low taxes have been a cornerstone of the GOP platform for more than 30 years, since Republicans in California led passage of Proposition 13 in 1978, and many party campaigns have been built on pledges to cut taxes.

That congressional class of 1978 had pivotal members, including Dick Cheney, who as vice president would help engineer tax breaks approved in 2001 and 2003 under President George W. Bush.

President Reagan slashed top income rates in the 1980s and “the rest is history,” said John J. Pitney Jr., a professor of American politics at Claremont McKenna College.

Only when Bush’s father broke his no-taxes pledge, contributing to his defeat in the 1992 presidential election, have Republicans wavered. “In an odd way, George H.W. Bush did more than anyone else to solidify GOP opposition to new taxes,” Pitney said.

But the current debate over the payroll tax cut has divided the party despite efforts by Republican leaders to unite their members.

Approved in late 2010 as part of an $858-billion deal to extend the Bush-era tax cuts, the payroll holiday has given workers a break of 2 percentage points off the tax they pay into Social Security.

It was billed as a one-year effort to stimulate the economy by letting workers keep a little more in their paychecks, but with the recovery still sputtering, analysts say failure to extend it would stunt the nation’s economic growth in 2012.

When the package passed, none of the costs were paid for, but lost revenue to the Social Security trust fund was to be replenished from the budget — an approach conservatives say only adds to the nation’s debt. Now, the prospect of offsetting the $112-billion cost with budget cuts has not been enough to win votes from conservative lawmakers.

“We have two issues to deal with: One is the deficit and one is the economy,” said freshman Rep. James Lankford (R-Okla.), who agreed with those at a GOP meeting who questioned the rationale for continuing the break.

But others recognize the political peril of allowing the tax break to expire at the end of December. Freshman Rep. Jaime Herrera Beutler (R-Wash.) said she was willing to entertain closing corporate tax loopholes to defray the costs.

“You don’t raise taxes on middle-class families. This is important. It hits moms and dads and working families,” she said. “Let’s stop subsidizing corporations to exist. That’s not free market to me.”

lisa.mascaro@latimes.com