The House voted Tuesday to enter into negotiations over the payroll-tax cut, but the top Senate Democrat refused, leaving an impasse that threatens to increase taxes on 160 million workers and cut off unemployment benefits to millions of recipients.
House lawmakers’ 229-193 vote essentially leaves the tax cut in limbo. A bill extending the tax cut, unemployment compensation benefits and other year-end items has left the House, meaning the Senate must take the next step.
Senate Majority Leader Harry Reid, Nevada Democrat, called the House vote “unconscionable” and said he won’t take up the bill or enter into negotiations, leaving the two chambers with no clear path forward.
“Let’s not play brinksmanship,” President Obama pleaded from the White House in the afternoon.
He urged House Republicans to take up the Senate’s two-month tax cut, which he said would allow time for Congress to reach a longer-term deal early next year.
“I’m calling on the speaker and the House Republican leadership to bring up the Senate bill for a vote. Give the American people the assurance they need in this holiday season,” Mr. Obama said.
What Mr. Obama is requesting, though, is no longer possible. With Tuesday’s vote, the House officially rejected the Senate amendment, requested a conference committee and sent the bill back to the upper chamber for action.
“We rejected the Senate bill, and we moved to go to conference. Under the rules of the Congress, that means the papers that were in our possession are on the way back to the United States Senate,” said House Speaker John A. Boehner, Ohio Republican.
Democratic aides said the House could write and pass another version of the Senate’s bill, though that, too, would require more Senate action before it could reach the White House.
The House has passed a one-year extension of the 2 percentage point payroll-tax cut, along with a two-year extension of full payments to doctors who take Medicare patients, and another round of unemployment benefits for the long-term jobless. The bill also includes a provision directing the administration to make a final decision on building the Keystone XL pipeline.
The Senate couldn’t agree on a long-term measure and instead passed a two-month extension of all of those provisions while including the Keystone pipeline language.
In requesting a conference committee to hammer out differences, House Republicans said they are returning to a legislative tool that was commonly used until the past five years.
Mr. Reid said he is not prepared to enter into conference negotiations until the House agrees to pass the Senate’s two-month bill.
“I have been trying to negotiate a yearlong extension with Republicans for weeks, and I am happy to continue doing so as soon as the House of Representatives passes the bipartisan compromise to protect middle-class families, but not before then,” Mr. Reid said.
The Senate bill passed on Saturday in a 89-10 vote, receiving strong support from both sides of the aisle.
Democrats said the GOP’s parliamentary demands won’t appease voters who want the tax cuts extended and don’t care how.
“I cannot imagine a single American opening up their paychecks in January, seeing there was $100 or $200 less, and saying, if only they had gone to regular order. If only they had gone to a House-Senate conference,” said Rep. Steve Israel of New York, who runs the Democratic Congressional Campaign Committee.
“This is partisan, middle-class mugging,” Mr. Israel said.
Republicans said their plan would guarantee a larger tax cut and more certainty for taxpayers than the Senate plan.
“The Senate voted to give the American people a $166 tax cut. We voted to give the American people a $1,000 tax cut,” Mr. Boehner said.
Senators have completed business for the year and are on a monthlong recess. House Republicans said they will adjourn Wednesday, though they said they will leave negotiators in Washington in case senators change their minds.
Seven Republicans joined 186 Democrats in voting against the motion to go to conference. One of those Republicans opposed the legislation because it increases taxes on new mortgages, while another said he opposed the deal because payroll taxes are used to fund Social Security, and he said Congress was using gimmicks to replenish the revenue that would be lost under the tax cut.
Both House and Senate versions of the legislation call for money to be transferred from general funds to Social Security to make up for the shortfall, but since the government is running a deficit, that means the U.S. would have to borrow the money it uses to replace the Social Security funds.
Both the House and Senate versions seek to match the lost revenue with concurrent tax increases or spending cuts.
The Senate legislation relies solely on the mortgage fee, which raises just enough money to cover the two-month bill.
To afford the yearlong tax cut, House Republicans’ bill goes well beyond the Senate’s measure. It includes the same mortgage fee, but also freezes federal workers’ salaries and reduces spending on last year’s health care legislation.