In surprise move, GOP leaders admit defeat in payroll tax battle
House GOP leaders had wanted to offset the cost of a payroll tax extension by spending cuts. But their decision Monday suggests that the political cost of a stalemate was too high.
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But it is not clear how many will buck their own leadership on this issue. To Americans making $50,000 a year, a $20-a-week increase in money taken out of their paychecks will look like a tax hike – a move at odds with the GOP pledge to cut taxes.Skip to next paragraph
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“There is still the very real issue that we’re either taking money from the Treasury to shore up Social Security or we’re denying revenue to a program that’s going to put it in a more difficult position,” says Steve Ellis, vice president for Taxpayers for Common Sense.
But he adds that it’s a smart political maneuver for House Republicans, because it defuses the argument that they are opposing a tax cut. “I’m not saying it’s responsible budgeting, but it’s not bad politics,” he adds.
In the weeks of negotiations since December, both sides before Monday had appeared to be locked into nearly the same positions they were last year. Democrats still proposed paying for extending the payroll tax break by hiking taxes on incomes over $1 million – a nonstarter for Republicans committed to no tax hikes.
“This is not our first choice,” said Speaker Boehner, majority leader Eric Cantor of Virginia and majority whip Kevin McCarthy of California, in a joint statement on Monday. “In the face of the Democrats’ stonewalling and obstructionism, we are prepared to act to protect small businesses and our economy from the consequences of Washington Democrats’ political games.”
While applauding the GOP reversal on the payroll tax, the White House and Democratic leaders are urging completing negotiations on the entire package, including unemployment insurance and the Medicare doc fix.
“The Republican plan to decouple the payroll tax jeopardizes both the ability of seniors to see their Medicare doctors and benefits for millions of Americans who lost their jobs,” said House minority leader Nancy Pelosi (D) of California. “There is no reason all three of these priorities cannot proceed at the same time as both the House and Senate agreed."
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