House kills payroll-tax bill, sets up showdown with Senate

posted at 1:25 pm on December 20, 2011 by Ed Morrissey

I guess it wouldn’t be Christmas without some brinksmanship all the way to New Year’s Eve.  Last year that brinksmanship involved the extension of Bush-era tax rates and unemployment benefits.  This year, thanks to a very curious reversal, it will be the payroll-tax holiday — or more precisely, its length:

The House voted Tuesday to disagree with the Senate-passed payroll tax bill, and to call for a House-Senate conference to sort out differences between the bills.

The move is intended to put pressure on Senate Democrats to reconvene and meet with the House over the bill, even as Democrats say the Senate is done for the year.

As predicted by Republican leaders on Sunday, the motion to disagree with the Senate was approved with the support of nearly every Republican. The motion was passed 229-193, and only 7 Republicans voting against it.

And why did House Republicans block the Senate bill?  Not to oppose the extension of the tax holiday, which would make some sense.  The cut in revenue to the Social Security fund expands the already-significant deficit between revenues and benefit payments in SSA, which means that more money has to come out of the general fund to cover the gap — and that means more deficit spending.  That might make sense if the cut produced a burst of economic growth, but just like the Making Work Pay tax cut in Obama’s stimulus package and the Bush withholding-tax reduction in 2008, the payroll-tax holiday failed to produce any such momentum in 2011.  It’s another failed gimmick from an administration that has offered nothing but failed short-term gimmicks in place of a responsible economic and regulatory policy.

No, the House blocked this bill because they objected to the temporary nature of the holiday.  Actually, that’s not even true, since their preferred position is another yearlong extension of the cut, which is so temporary and inconsequential that it has no macroeconomic impact at all.  They’re objecting because it will only extend it for two more months:

House Republicans say a conference is the best way to resolve the differences between the two bills — the House bill calls for a year-long extension of the payroll tax holiday and unemployment insurance, and pays for those extensions through reforms to these programs and further cuts to discretionary spending.

The Senate bill, which 39 Senate Republicans supported last week in an 89-10 vote, extends the payroll tax and unemployment insurance for just two months, and pays for those extensions by increasing fees mortgage holders would pay to Fannie Mae and Freddie Mac.

I have a question — do Republicans on Capitol Hill bother to talk to one another?  If this package was so objectionable, why didn’t Boehner work with Mitch McConnell to force the demanded compromise in the Senate?  Only ten Senators voted against this bill, which means that the overwhelming majority of the Republican caucus gave it the thumbs-up.  Under those conditions, Reid’s anger is entirely legitimate.  He and McConnell worked out a compromise in which Republicans got the pipeline in exchange for a short-term extension that will get Congress through the holidays, but allows the GOP to push for more in later negotiations. Bear in mind that both parties have taken the same approach on budgeting matters — as they did last year in that bout of brinksmanship.

If the House thinks holding this up after getting overwhelming bipartisan approval in the Senate will win them political brownie points, they’d better take another look at the polls.  Obama is moving up incrementally on questions of protecting the middle class, and the GOP now wants to give him the position of fighting for a tax cut that Republicans don’t oppose, but won’t approve, either.  If they want to fight for principle in opposing the payroll tax holiday, then this makes sense.  If they want to fight to make it permanent so that its limited ability to impact long-term business and budget planning, then it would also make sense.  But blowing up a compromise simply because they object to a shorter-term gimmick over a slightly longer-term gimmick is fundamentally unserious.

Update: Because I didn’t make one point clear in this post, a commenter asked a good question:

Sorry Ed, but the average person will take Republicans side on this. A tax cut for a year or a tax cut for 2 months?

Most people will want that year long cut.

Actually, both sides want a year-long holiday extension.  The Senate compromise was reached with the understanding that further negotiations would take place to establish it.  The House wants to bypass that and get it done now.  That’s the only difference between the House and the Senate at this point on the main issue.

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So, why aren’t Republicans pulling a Democrat demogoguery? Hey Seniors! The Dems are defunding SS.

Portia46 on December 20, 2011 at 2:29 PM

The answer is always the same..

GOP = The Stupid Party.

angryed on December 20, 2011 at 2:38 PM

The primary reason the GOP is called the stupid party is because they believe that Democrats want what is best for our country, but they just disagree on how to do it. But the fact is the Democrats are the evil party and always have been. Their motives are always evil. As soon as the GOP figures that out the better off we will all be.

Dasher on December 20, 2011 at 3:18 PM

ButterflyDragon has it right. People will look at their paychecks and say, “I like having that extra 3% in there. And, I like having it in there the entire year, not just for a few months.”

It’s an interesting argument, however, of whether the tax holiday should have ever been introduced at all. I am of the opinion that the less I pay to the government, regardless of what its intended purpose is, the more it is a good thing for me, my family and the local businesses I frequent.

That’s why I struggle a bit to understand why some republicans are against this tax holiday at all. Aren’t we for limited government? Don’t we know how to spend our money better than the government on our behalf?

I get that this is to fund a targeted specific social program, but let’s be honest; it’s not really separate at all. If it was, I could Google “lock box” and get results showing a chest full of dollars. Instead it returns pictures of Harry and Lloyd’s suitcase full of IOU’s.

But, like I said, I’m probably missing something.

convservativedogbite on December 20, 2011 at 2:01 PM
I think there is a good argument to be made regarding why we should not tamper with the SS fund even if it is more symbolic rather than real.
The fund is used to pay for SS. Employers take 7.65% multiply that X 2 and remit that amount to the irs.It is then supposed to be used to pay for SS,Medicare and Medicade. So when obama cuts 2% of it he’s really cutting 4% from an employer standpoint.Doing that really destroys the fund. This increases the deficit and basically is chaotic which is right up his alley.
The Socialistic goal is to incrementally have everyone turn towards big govt. for all their needs. Do away with specific funds etc. just have big govt. That is the be all, do all, for everyone.Create a huge dependency and voter base.
These guys are always three steps ahead of us.
As Republicans, we need to be the adults in the room expalin what he is doing.Then just say no to the 2% stop playing obama 2012 politics and push for the pipeline which “will” help the country.

rodguy911 on December 20, 2011 at 3:21 PM

Remember, whichever way the Republicans go, the Democrats will criticize it. There is no way they can win the rhetorical battle, because the other side will always find something wrong with it. So it might simply be best to do the right thing. But that seems to have gone by the wayside in an election year.

hachiban on December 20, 2011 at 3:10 PM

thread winner here!!! Forget about the message and do the right thing. We’ll take care of the message on these internets!

demedia has tried so hard to ignore Fast & Furious, the Tea Party effect, the sham administration of Freddie and Fannie, and so many other issues. None of it appears in your local papers but guess what? The dems get to approach the elections with their Attorney General about to be indicted for F&F, our new house members are making a huge difference and so far 6 people are under indictment in FM/FM shenanigans. They can no longer win the argument when facts destroy their lies. Do not let up because we know what the dems and their media will do.

DanMan on December 20, 2011 at 3:22 PM

Boehner and McConnel don’t talk, as evident by McConnel submitting his own budget plan in direct competition to Bohner’s moths ago. Boehner came out of the 2011 budget negotiations with Obama earlier this year and declared he had secured billions in cuts. qwhen the smoke and BS cleared, the truth was exposed that the REAL cuts only totalled millions – not BILLIONS. In doing so, Boehner exposed the fact that he is just as willing to lie to his Constituents and the American people for his own benefit as Obama is. I am so sick of BOTH the Democrats and Republicans playing these politcal GAMES at US Tax Pay er expense that I am ready to support a full fledged ‘Throw them all out’ effort and then follow Perry’s lead in affecting a TEMPORARY Congress, limiting Congress’ work hours/time down to 100 consecutive days a year. All of Congress’ accomplishments (Passed bills, etc) can be attributed to approximately 100 or less successful work days this year. The rest of the time they have ripped us all off, broken laws, and played useless partisan politcal games that have resulted in nothing but more tax payer dollars in their pockets for NO WORK BEING DONE! Bohner, like Reid, Pelosi, McConnell and others are nothing but lying partisan career politicians who all deserve to be fired and replaced!

easyt65 on December 20, 2011 at 3:34 PM

I say make it a cut of 6% and make it permanent.

Constitutional historian of conservative values on December 20, 2011 at 3:37 PM

In short, going with the two month extension does not create any uncertainty, because everyone knows it will get extended again. Sorry, but the House Republicans are just flat wrong on this one. After the Senate passed this extension with an overwhelming bipartisan majority, the American people are not going to side with the House.

And, frankly, they might as well just vote to make this thing permanent at this point. Because now and forever more, any attempt to return the payroll tax to its former rate will be shot down as an attempt to raise taxes on the middle class to avoid taxing the evil rich more. No Congress will ever successfully raise the rate back up.

I agree with the second part, Shump, but not the first. Well, the general American public that doesnt pay attention to anything more than soundbites might by that garbage. Anyone who pays any attention should be appalled at the Senate’s behavior.

I agree that everyone knows it’s going to get extended. The House knows, the Senate knows… everyone knows… which is why I don’t understand the GOP Senators voting for this garbage. If everyone knows it’s going to get extended… THEN JUST EXTEND THE D*MNED THING FOR A YEAR!!! Why putz around with this two month garbage??

If Congress wants to know why they have a 9% approval rating, someone should point to exactly this situation. Only in Washington would this make sense.

I blame the GOP Senators for voting for this and putting Boehner over the barrel.

By the way, I seem to recall back when this payroll tax holiday was passed that someone predicted EXACTLY this scenario. It may have been Ed or AP… I forget now. I do recall for sure someone saying at that time that the GOP Congress was walking straight into a trap in which the Dems would have the GOP in a no-win messaging situation.

Of course, if they think they will have had Obama “kill” the pipeline deal in two months, they may believe they would have the Republicans over a barrel (pun intended) at that point.

That thought occured to me also. But the mere existence of the pipeline proposal puts Obama over a barrel. His only saving grace in terms of the election was putting it off until after the election. Forcing him to decide within two months, regardless of whether he goes for or against it, is still going to get him in trouble with one of his major constituencies prior to the election (either unions or greenies).

Frankly, I don’t think there is any way in hell he can kill the pipeline. If he does, the GOP will absolutely pummell him to death on the jobs issue… “If jobs is #1 then how could you kill 20k construction jobs just to build it, not to mention all of the other jobs that would go along with maintaining it and distributing it’s resources?” Plus, I’m betting he gets way more campaign money from the unions than he does from the greenies. Those two groups are still not going to vote GOP, so it’s not a direct election threat there, but rather it’s the GOP messaging hitting the independents that he has to worry about. Which GOP message would hit the independents harder… Obama kills 20k construction job project and let’s Canada sell their oil to the Chinese, or Obama allows pipeline and risks habitat of the West Nebraska Yellow-Spotted Pink-Eyed Dung Beetle?

That said, I’m sure the GOP can find a way to screw that messaging up so that Obama comes out looking like a genius. Boehner and McConnell could screw up a one man parade.

gravityman on December 20, 2011 at 3:54 PM

Dems only want a 2 month extension for the opportunity for Obozo to bash repubs again in 2 months. Rush mentioned this on his show today. Can you argue the point? A year would put the next debate after the election.

cuffy-meigs on December 20, 2011 at 3:55 PM

Democrats are, have been, and always will be bad actors. They are far more street wise than Rs.

The only real question is why Mitch agreed to this is the first place. This is a total capitulation to Ried…who is no doubt being patted on the back by Soros/Obama/Axelrod as we speak.

Throwing a wrench into things to Create Chaos is a well worn tactic of the left. I assume that Reid threatened Mitch with bad press if he didn’t go along…or maybe Mitch is just stupid…or maybe people are play 4 dimensional chess.

I don’t know…but I do know that barry is running against an extremist party that can’t get anything done…and the Rs, so far, are cooperating

Basically, barry didn’t want the pipeline..or the light bulb thing. So in the end, we’ll get a clean bill, year long extension, no pipeline…and no bulb retraction.

Obama has the guns to do this…and that’s his goal

r keller on December 20, 2011 at 3:58 PM

Obama has the guns to do this…and that’s his goal

r keller on December 20, 2011 at 3:58 PM

Well… he would have the guns, but Holder sold them all to Mexico.

gravityman on December 20, 2011 at 4:42 PM

Take a look at what our government enjoys doing in their spare time.

mixplix on December 20, 2011 at 4:58 PM

demedia has tried so hard to ignore Fast & Furious, the Tea Party effect, the sham administration of Freddie and Fannie, and so many other issues. None of it appears in your local papers…

DanMan on December 20, 2011 at 3:22 PM

Right on with this part. But why give them more “ammunition” to distract from those issues?

This move by the House GOP seems like the wrong battle to pick in so many ways. Their reasoning for voting it down is contrary to the media’s claim that “the Tea Party made ’em do it.” But that will still be lost, in favor of the message that the Republicans are the party of “no”.

It just leaves a bad taste in almost everyone’s mouth. I could stand it better if they were doing it because we have to tighten the belt. Start the damn tightening, already.

connertown on December 20, 2011 at 5:00 PM

From what I understand the Senate version will be impossible to implement, because it attempts to prevent “rich” people from benefiting from the 2 percent cut for those two months. Payroll experts say is a logistical nightmare. I say, let the house approve it and then let the Dems stew in the mess it creates.

Dasher on December 20, 2011 at 6:17 PM

I admit that this could backfire on the GOP if they are not careful, but thinking that it was a rather necessary move. Demon-Rats stand to take some real heat over this aswell if they fail to reconvene and finish up their work on such a major issue, but I guess we all will just have to wait and see how it all plays out.

RiCkY.D. on December 20, 2011 at 7:22 PM

Harry Reid has proven time and again he cannot be trusted to negotiate in good faith and keep any bargains to which he may agree. Mitch McConnell got sold a bill of goods if he thinks that when it comes time to negotiate the rest of the ‘tax cut’ extension, HR will pick up where they left off. He won’t do his constitutionally mandated duty to generate a budget! Why on earth should we think he won’t do his very best to screw us in two months? He’s only buying time to find another find another weapon with which to bludgeon Republicans. There can be no gentleman agreements with a man who has no honor. There’s no way we’re going to get out of this without some mud and blood on us, so might as well return the favor.

John_W on December 21, 2011 at 12:24 AM

Ed Responded to a commenter:

Actually, both sides want a year-long holiday extension. The Senate compromise was reached with the understanding that further negotiations would take place to establish it. The House wants to bypass that and get it done now. That’s the only difference between the House and the Senate at this point on the main issue.

And why would any rational observer of American politics believe one word that Sen. Harry ‘I Wannabe King’ Reid “promised”?
How many times have Reid, Obama, and Pelosi (hell, BillyJeff was the master political liar) “promised” one thing and then did the opposite? I lost count years ago.
The Senate, under Reid’s “leadership”, is a disgrace.
Reality bites, eh?


Karl Magnus on December 21, 2011 at 11:07 AM