Wanted to be sure you saw this Politico article today highlighting Republican division over extending middle class tax cuts. One would think that they had learned their lesson after walking away from 160 million Americans in December, but apparently not. With less than a month to take action, it looks like Republicans are willing to put middle class tax cuts at risk once again:
Key excerpt: “Challenges will be most acute in the House, where Republicans are still reeling from the December payroll tax debacle. Boehner moved the final two-month extension under a unanimous consent agreement while most GOP members were back in their districts. Leadership had to dissuade some rank-and-file members from coming back to Washington to oppose the deal. GOP leaders may be forced to deal with another potential mutiny this time around.”
Payroll tax cut splinters GOP
Republicans, once again, face a defining choice less than a month before the payroll tax holiday expires.
Should they extend the tax break for workers and blunt President Barack Obama’s campaign plan to tag them as a band of out-of-touch, intransigent do-nothings?
Or should they stiffen their collective spine and end a tax cut that many of them consider fundamentally bad policy?
It’s a dilemma that’s splitting the party and threatening to give leadership another bout of migraines.
But the split in strategy could have repercussions beyond the likelihood of another Capitol Hill drama in the heat of campaign season. It has senior Republicans on the Hill more pessimistic about the prospect of an agreement — especially as a House-Senate conference committee struggles to bridge the partisan divide.
“It’s far from a done deal,” one senior House Republican said, pegging the chances of a deal at 50-50.
Failure would play directly into Obama’s campaign theme of an inept Congress and an opposition party unwilling to cut taxes for middle-class Americans who need relief the most.
So eager are some Republicans to keep the tax-cutting mantle during an election year that they’re willing to vote for a plan they vehemently oppose.
“I think the election needs to be about President Obama, his policies and his economy and his enablers, obviously,” said Texas Sen. John Cornyn, a member of Republican leadership who in December opposed the Senate GOP’s yearlong tax cut extensions. “He’s going to try to make it about Congress — so I’m for removing any distraction that we can and keeping the focus on his economy and his policies and his enablers.”
Asked whether that means Republicans should choose politics over policy, Cornyn said, “Let’s just say it’s a little longer-term decision rather than just a short-term decision. There’s a lot of damage that I think President Obama could do in a second term that I’d like to avoid.”
That’s where the split comes in — and where House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) could very well have problems.
The intraparty strife isn’t new. In December, the majority of Senate Republicans voted against a leadership-approved plan by Nevada Sen. Dean Heller that would have extended the payroll holiday for a year and paid for it with cuts to the federal workforce.
Republicans were dubious that the tax cut would spur economic growth and believed it would further deplete the Social Security trust fund. Many rank-and-file members preferred broad reforms to entitlement programs and the Tax Code.
Extending the 2-percentage-point payroll tax cut for the rest of the year would cost $100 billion, and the price tag of the entire package could be closer to $160 billion depending on what negotiators end up agreeing to.
Sen. Bob Corker (R-Tenn.) called extending the tax cut a “very slippery slope.” Asked whether he’s concerned with Boehner’s and McConnell’s approach, Corker said: “Would I rather see policies emanate that way from the bottom up? Yeah. But look, they’re in a difficult position — and I understand that.”
“For me, it’ll be a hard sell,” said Sen. Mike Johanns (R-Neb.). “I just think that horsing around with money that goes to the Social Security fund is dangerous. And we’re already borrowing too much money.”
Other Republicans are pining for a different approach. Many say reforming parts of the Tax Code would be a more palatable policy choice. Georgia Rep. Paul Broun said he’s had “partial” conversations with leadership about “better ways to go” than the payroll tax holiday.
“This payroll tax holiday is just a gimmick to try to get [Obama] reelected,” he said in an interview. “This is bad policy.”
But Congress, hoping to seize a rare instance of legislative achievement, needs to hitch a number of other pet ideas to the payroll tax extension. Conference committee members spent much of their time last week debating a host of provisions peripheral to the tax cut.
Among those are the payments to doctors who treat Medicare patients — formally called the Sustainable Growth Rate — which are soon set to fall. Conferees are also considering an extension of unemployment benefits — and Republicans are likely to hold out for some reforms of the system, a sticking point between the two parties.
Challenges will be most acute in the House, where Republicans are still reeling from the December payroll tax debacle. Boehner moved the final two-month extension under a unanimous consent agreement while most GOP members were back in their districts. Leadership had to dissuade some rank-and-file members from coming back to Washington to oppose the deal.
GOP leaders may be forced to deal with another potential mutiny this time around.
“Our marketplace needs certainty,” Rep. Jason Chaffetz (R-Utah) said. “Tax holidays just are bad policy. A year is pretty short. One of the things we had in our Pledge to America is the need for certainty. People can’t make business decisions about jobs and hiring unless there’s certainty.”
Even in the House, though, there are Republicans in Cornyn’s camp — legislators who recognize the downside in policy but also the political necessity of getting a deal wrapped up.
“I think there is merit in the argument that the payroll tax [holiday] doesn’t stimulate the economy, but I also think we’re in a position today where if we allow people during a down economy to keep as much money in their pockets as they can, that’s a good thing,” said Rep. Patrick Tiberi, an Ohio Republican close to Boehner who serves on the Ways and Means Committee. “I’m hopeful that … between the two bodies, we can come up with an agreement that will allow us to go to the end of the year and pay for it.”
Democrats are eager to exploit the rift. Senate Majority Leader Harry Reid (D-Nev.) has been warning that the Senate will vote repeatedly on extending the payroll tax cut — along with jobless benefits and the so-called doc fix for physicians who serve Medicare patients.
Reid said leadership has begun drafting a bill and promised votes soon, but he refused to provide details on how Democrats would pay for the package.
Republicans call Reid’s move counterproductive, arguing that it only undermines the work of the bipartisan committee.
“It would seem those energies could be better directed toward the conference negotiations themselves, in which Senate Democrats have not actually presented a full plan,” Boehner said in a statement Friday. “You can’t have a ‘backup plan’ if you haven’t offered anything to back up.”
Negotiators now face a crucial week of talks as rhetoric continues to get more hot and the deadline is drawing near.
Rep. Chris Van Hollen (D-Md.), a conferee, said negotiators have “made progress on the edges of some of the secondary issues, but we haven’t tackled the core issues yet.”
“The clock is ticking,” he said ahead of three meetings this week. “I said all along, this is harder than it looks.”
Seung Min Kim contributed to this report.