WASHINGTON – In an abrupt about-face, House GOP leaders announced Monday that they are willing to extend the 2 percentage-point cut in the payroll tax through the end of the year and add the approximately $100 billion cost to the nation’s $15 trillion-plus debt.
House Speaker John Boehner, R-Ohio, Majority Leader Eric Cantor, R-Va., and GOP Whip Kevin McCarthy of California said the House could vote on the payroll tax measure this week.
However, the fate of unemployment benefits for millions of the long-term jobless, and efforts to forestall a scheduled cuts in fees to doctors who treat Medicare patients, would remain in the hands of a House-Senate negotiating panel that’s looking for ways to pay for them.
The GOP statement came after intense talks this weekend failed to produce an agreement. Republicans were pressing for pay cuts for federal workers and requiring them to contribute more to their pensions. They recoiled at a Democratic proposal to raise Transportation Security Administration per-ticket airline security fees.
“Democrats’ refusal to agree to any spending cuts in the conference committee has made it necessary for us to prepare this fallback option to protect small business job creators and ensure taxes don’t go up on middle-class workers,” the GOP leadership statement said.
Without action by Congress by the end of the month, payroll taxes will rise for 160 million Americans. The 2 percentage-point tax cut delivers about $20 a week to a worker making $50,000 a year and a tax cut totaling $2,000 this year for someone making a $100,000 salary.
Democrats were encouraged and said the development could break an impasse over the payroll tax proposal and the other expiring provisions. But they also warned that decoupling the payroll tax from the larger legislation could jeopardize efforts to renew the jobless benefits and the fix to the Medicare payment formula.
“It’s completely irresponsible to leave behind nearly 5 million unemployed Americans whose benefits will expire and 47 million seniors and disabled Americans whose access to health care would be jeopardized,” said Rep. Sander Levin, D-Mich., a member of the House-Senate negotiating panel.
“There is no reason all three of these priorities cannot proceed at the same time,” said House Democratic Leader Nancy Pelosi, D-Calif.
The GOP move reflects a desire by party leaders to avoid a political hit if the payroll tax expires at the end of the month. And it would avoid burdening businesses with uncertainties regarding their payroll systems.
On the other hand, jobless benefits lapsed for several weeks in 2010, and delays in adopting a so-called Medicare “doc’s fix” can be dealt with by delaying the processing of Medicare claims.
