GOP Leaders Support Payroll Tax Extension

Congress only has two weeks before inaction would result in a tax hike for 160 million Americans. The payroll tax cut extension passed in late December is set to expire at the end of the month.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

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I'm Melissa Block.

And first this hour, a reversal on Capitol Hill. Just before the holidays, the White House battled Republicans over a number of issues, including an extension of a payroll tax cut and unemployment benefits, and we seemed to be heading for an encore this month. But tonight, lawmakers say they have reached a possible deal. Details have yet to be fully worked out. The breakthrough began with the surprise announcement from top House Republicans. They say they want to extend the payroll tax cut through the end of the year. And as NPR's David Welna reports, they won't insist it be paid for with budget cuts.

DAVID WELNA, BYLINE: To understand what an about face the House GOP leaders made by not insisting the payroll tax cut be paid for, listen to what House Speaker John Boehner had to say just five days ago about the ill-fated bill his chamber passed late last year.

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REPRESENTATIVE JOHN BOEHNER: House Republicans did what the president asked us to do. We passed a full-year extension of the payroll tax credit, unemployment benefits fully paid for as the president said that they must be.

WELNA: That fully paid for bill blew up when Senate Democrats refused to pass it, and Boehner was forced to accept the Senate's two-month extension of the tax cut that's about to run out. In the statement issued last night, Boehner said that because efforts by a conference committee to hammer out a compromise on extending the payroll tax cut had stalled, he may simply pass a 10-month extension of that tax break this week. He said nothing about paying for it. Democrats today pounced on Boehner's move as a sign of weakness.

SENATOR CHARLES SCHUMER: The Republicans called a full-scale retreat on the payroll tax cut.

WELNA: That's New York Democrat Charles Schumer, chief message man for Senate Democrats.

SCHUMER: We take this as a sign that our Republican colleagues read the handwriting on the wall, that the public is not going to go along with letting the payroll tax cut expire. They've admitted that. And they will not go along with letting UI or SGR expire as well.

WELNA: UI is shorthand for emergency unemployment insurance, which also expires at the end of the month. And SGR refers to mandatory cuts in payments to Medicare doctors that will kick in unless Congress acts. Today at the White House, President Obama held a kind of pep rally with people who've ridden him about what it would mean to lose a payroll tax cut that's added on average $40 to each paycheck. Mr. Obama used the occasion to tweak his Republican adversaries on Capitol Hill.

PRESIDENT BARACK OBAMA: No ideological sideshows to gum up the works, no self-inflicted wounds. Just pass this middle-class tax cut, pass the extension of unemployment insurance. Do it before it's too late, and I will sign it right away.

WELNA: Hours later, House Minority Leader Nancy Pelosi issued a statement saying she and her fellow Democrats will support a bill extending the payroll tax cut, but she also said Congress should cancel a week-long break next week if unemployment benefits and the so-called doc fix are not extended as well. That call was echoed by Senate Majority Leader Harry Reid.

SENATOR HARRY REID: Payroll tax is going to pass, but we hope before it gets over here, and we'll take in mind the 3.5 million people who are drawing unemployment benefits as we speak.

WELNA: If anyone seemed miffed by this latest twist in the payroll tax cut saga, it was congressional Republicans. Arizona Senator Jon Kyl is on the committee that's failed so far to strike a compromise on extending the expiring provisions. In an interview, he questioned whether the payroll tax cut would indeed not be paid for.

SENATOR JON KYL: When we say not paying for it, that's not really true. It's being paid for, but it would be paid for by borrowing money, adding that to the debt, and then eventually taxing people to pay for it.

WELNA: And pressed by reporters, Senate Minority Leader Mitch McConnell refused to endorse the decision made by his fellow GOP leaders in the House.

SENATOR MITCH MCCONNELL: I don't have a view on it right now, but I certainly understand their feeling of frustration that this conference seems not to be getting anywhere.

WELNA: Or at least it did not seem to be getting anywhere until the requirement of paying for a payroll tax cut was removed. That may clinch a deal for extending the unemployment insurance and doc fix as well, both of which would have to be paid for. David Welna, NPR News, the Capitol.

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