House GOP has backup plan to extend payroll-tax cut

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With bipartisan talks stalled on a deal to extend the expiring payroll-tax cuts, House Republicans on Monday offered a backup plan to continue a two-month stopgap through the rest of the year.

But House GOP leaders’ proposal — in a change of position — didn’t call for the tax holiday to be offset with spending cuts elsewhere in the budget.

The plan would extend for 10 months the temporary deal, which provides a 2 percent Social Security payroll-tax cut for 160 million wage earners that expires at the end of month, in case a congressional committee tasked with brokering a compromise fails to meet its deadline.

The plan would not deal with expiring unemployment benefits to the long-term jobless and scheduled cuts to doctors who treat Medicare patients.

“This is not our first choice,” said House Speaker John A. Boehner of Ohio, House Majority Leader Eric Cantor of Virginia and House Majority Whip Kevin McCarthy of California in a joint statement about the backup plan. “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.”

Democratic and Republican leaders in both chambers of Congress have said they want to extend the payroll-tax holiday through 2012. And lawmakers generally agree the package should include provisions to extend expiring unemployment benefits and the so-called Medicare “doc fix” through 2012. But squabbles regarding add-ons and how to pay for the package have kept a deal from being reached.

House Republicans until Monday insisted any extension of a payroll-cut holiday be paid for with spending cuts elsewhere. Democrats have opposed offsetting the tax break, arguing that Republicans didn’t demand the same treatment for tax cuts for the wealthy.

“Whether the House Republican leadership is able to get the support of their membership to move an unpaid- for payroll tax cut or not is really not the issue,” said a senior House Democratic aide. “What happened today is clear: House GOP leadership could no longer sustain their position on payroll tax cut — demanding that it be paid for by cuts on middle class, while refusing to ask millionaires to pay a dime.”

Rep. Kevin Brady, a Texas Republican who is on the payroll tax committee, said he supports his leaders’ alternative plan.

“If Democrats were serious about finding the necessary savings to offset the loss of revenue to Social Security this year I might be more hopeful,” he said. “But as it is, I think the House GOP leadership is prudent to file this as a back stop in case negotiations continue to hit a brick wall.”

The 20-member bipartisan and bicameral payroll tax conference committee, led by House Ways and Means Chairman Dave Camp, Michigan Democrat, has met several times in recent weeks but has made little progress.

Mr. Camp and Sen. Max Baucus of Montana, the Democrats’ designated leader on the panel, spent the weekend negotiating. A senior GOP aide said while the pair made “some progress” they failed to come close to a deal.

The House Republican leaders said their Plan B isn’t meant to compete with or hinder the payroll-tax panel but rather to buy it time to finish its job.

“We support the work of our conference negotiators and continue to support a responsible resolution,” the three GOP leaders said. “Republicans have attempted to reach an agreement and negotiated in good faith for months, and we will continue to do so.”

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