House GOP may extend payroll holiday without offsets

Rep. John Boehner, R-Ohio Rep. John Boehner, R-Ohio Liz Lynch/National Journal

The three top House Republicans announced Monday they may bring to a vote this week a “backup” bill to extend only the payroll-tax holiday -- and to do so without spending offsets. 

Citing the lack of progress by a conference committee tasked with finding a way to extend it, along with federal unemployment insurance and a "fix" for doctors facing a cut in Medicare reimbursement, the trio said they propose the 10-month extension on the payroll-tax cut only out of exasperation. 

Democrats are calling the GOP announcement “a cave.” 

Speaker John Boehner, R-Ohio, and his top two lieutenants say they are protecting small businesses “and our economy from the consequences of Washington Democrats’ political games.” 

"Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll-tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the ‘doc fix’,” explained a statement from Boehner, Majority Leader Eric Cantor, R-Va., and Majority Whip Kevin McCarthy, R-Calif. 

The joint statement added: “If Democrats continue to refuse to negotiate in good faith, Republicans may schedule this measure for House consideration later this week pending a conversation with our members.” 

A House GOP leadership aide said: “If this is necessary, we obviously expect we’ll get support from Democrats who have always supported an unpaid-for extension."

A two-month package on all three measures expires Feb. 29. That looming deadline combined with a seemingly deadlocked conference committee has partisan tension once again building on Capitol Hill.

In response to Boehner's announcement, a Senate leadership aide said: “Republicans offered to pass the payroll-tax cut without offsets over the weekend, which we considered a major breakthrough.

“This is just an acknowledgment of their offer; they should send it on over,” the aide added.

Whether a “cave” or a bluff, negotiators seemed to be making progress heading into the weekend then stalled when lawmakers couldn't agree whether the cost of the entire package needed to be covered.

House GOP leaders first ran the idea of only partially paying for the package by their rank-and-file members as an alternative to being cast by Democrats as opposing a tax break that benefits more than 160 million middle-class Americans. 

Apparently GOP leaders think that portrayal is damaging enough that they would rather let one component go uncovered than get blamed for nixing a popular tax cut. However, they will continue demanding that the unemployment insurance and "doc fix" extensions are paid for -- with spending cuts.

“This is not our first choice,” the leadership trio stated. “Our goal is to reach a responsible agreement in conference. But 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.” 

House Budget Committee ranking member Chris Van Hollen, D-Md., criticized their proposal for its piecemeal approach.

The three measures “should stay together” Van Hollen said. Addressing only payroll would place the unemployed and Medicare beneficiaries at risk, Van Hollen said.

Earlier, Van Hollen said he and many Democrats would support extending the payroll-tax holiday without offsets, but later clarified that he believes the three pieces must remain linked.

Dan Friedman contributed to this report.

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