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House GOP Rejects 2-Month Payroll Tax Cut

Plan could prevent a 27% cut in Medicare payments

WASHINGTON (AP) — The House of Representatives rejected on Tuesday a plan backed by President Barack Obama to extend a 2 percentage point payroll tax cut for two months to buy time for talks on a full-year renewal.

See also: AARP to Congress: Keep doctors in Medicare program

Speaker John Boehner walks to vote on payroll tax cut bill on December 20, 2011.

Susan Walsh/AP

With its vote, the Republican-dominated House rejected Obama's position and instead demanded immediate talks with the Senate on a yearlong plan.

If Congress fails to pass a bill by the end of the year, payroll taxes will go up for 160 million workers on Jan. 1. Also, almost 2 million people could lose unemployment benefits in January.

The House vote, 229-193, kicks the measure back to the Senate, where the bipartisan two-month measure passed on Saturday by a sweeping 89-10 vote. The Senate then promptly left Washington for the holidays. The Senate majority Leader Harry Reid says he will not allow bargaining until the House approves the Senate's short-term measure.

The vote caps a partisan debate on Obama's jobs agenda, which has featured numerous campaign-style appearances but little real bipartisan negotiation, other than Senate talks last week that produced the two-month extension.

The standoff is certain to resonate with voters ahead of next November's presidential and congressional elections. Obama, who is running for a second term, has made extending the tax cut his year-end priority, arguing that it would pump money into the slowly recovering U.S. economy.

The Senate's short-term, lowest-common-denominator approach would renew a 2 percentage point cut in the Social Security payroll tax, plus jobless benefits averaging about $300 a week for the long-term unemployed, and would prevent a 27 percent cut in Medicare payments to doctors. Social Security is the government's pension program for most retired Americans, and Medicare is the government's main medical program, also largely for the elderly

The House passed a full-year extension last week, containing many spending cuts opposed by Democrats.

House Republicans, however, have erupted in frustration at the Senate measure, which drops changes to the unemployment insurance system pressed by conservatives, along with cuts to Obama's health care law.

Also driving their frustration was that the Democratic-ruled Senate, as it so often does, appeared intent on leaving the House holding the bag — pressuring House lawmakers to go along with its plan.

Both sides were eager to position themselves as the stronger advocates of the payroll tax cut, with House Republicans accusing the Senate of lollygagging on vacation and Senate Democrats countering that the House was seeking a partisan battle rather than taking the obvious route of approving the stopgap bill to buy more time for negotiations.

Also of interest: Older Americans need health care, retirement security. >>