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House leader rejects Senate payroll tax plan

By Tom Cohen, CNN
updated 10:38 AM EST, Sun December 18, 2011
STORY HIGHLIGHTS
  • NEW: Obama adviser says the chances are small that the House will reject the Senate plan
  • House Speaker Boehner calls for more negotiations on the payroll tax issue
  • The House will take up the Senate plan for a two-month extension on Monday
  • Obama says not extending tax cuts and assistance through next year would be inexcusable

Washington (CNN) -- House Speaker John Boehner said Sunday that he opposed the Senate plan to extend the payroll tax cut for two months, while a top economic adviser to President Barack Obama said chances were small that the House would reject the proposal.

Boehner, R-Ohio, told the NBC program "Meet the Press" that Congress should continue negotiations to come up with a compromise by the end of the year that would extend the lower payroll tax rate for a full year, as sought by Obama.

"It's pretty clear and I and our members oppose the Senate bill," Boehner said, adding that a two-month extension was "just kicking the can down the road."

The Senate plan passed Saturday was a fallback position after Democrats and Republicans were unable to reach a comprehensive agreement to extend the cuts and unemployment benefits for a full year.

Gene Sperling, the director of the White House's National Economic Council and Obama's assistant on economic policy, told CNN's "State of the Union" that the Senate's strong bipartisan support in the 89-10 vote for its two-month plan made House rejection unlikely.

"What was significant about the vote yesterday (is) it had 89 votes -- the compromise to extend the payroll tax cut, unemployment for 60 days into next year had 90% support," Sperling told CNN Political Correspondent Joe Johns. "The only things that get 90% support in the United States Senate these days are mom, apple pie, and chocolate ice cream, so I really think it is very unlikely that the House would disrupt this compromise."

At the same time, Sperling assessed the chances for the issue to get resolved without further political drama in Congress before the end of the year as "very small."

In the end, the possibility remained that a deal to extend the payroll tax cut for a full year could happen by January 1, when the current rate is set to go up.

"This is Washington, D.C. -- you don't categorically rule out anything," Sperling said.

The measure is the latest in a series of last-ditch temporary fixes, postponing another legislative showdown between lawmakers until February, when the bill's provisions would expire under the Senate plan.

However, it requires approval by the House, and Boehner's comments reinforced initial rejection of the plan by House Republicans, especially conservatives who don't like the payroll tax extension in any form. The House will take up the measure Monday.

Boehner apparently reversed himself since a conference call with caucus members Saturday, when he was the only House Republican leader to express support for the Senate plan, according to a GOP source. Boehner was not asked about the caucus meeting in the NBC interview.

Obama and Democratic leaders have called for final approval of the Senate plan to decide the issue for now and set up further talks to reach a longer-term resolution after Congress returns from its holiday recess in January.

On Saturday, Obama told reporters that he was pleased with the Senate's vote, but added that extending the cuts and assistance through next year should be considered just a "formality."

To do otherwise, he said, would be "inexcusable."

Failure to pass the payroll tax measure -- a major part of Obama's job-creation plan -- would have cost working Americans an average of $1,000 in higher taxes next year.

Senate Majority Leader Harry Reid, D-Nevada, said Friday that his party supported the proposed two-month deal because "that was the best we could get."

The $33 billion deal, should it pass the House, also avoids cutting federal funds to physicians who accept Medicare and speeds up a decision over a pipeline, giving the White House 60 days to make a call on the controversial Keystone XL project.

According to a GOP source, Boehner described the Senate vote as "a good deal" and "a victory" in a conference call with Republican Congress members on Saturday. Oklahoma Rep. Tom Cole and North Carolina Rep. Walter Jones also expressed support, the source said.

However, House Majority Leader Eric Cantor, R-Virginia, disagreed, saying he thought the package should be extended for a full year.

"The rank-and-file members are extremely opposed to it," said the GOP source, adding that most members are concerned with the two-month extension, its effect on the middle class, and the political benefit the White House could gain in the national dialogue over taxes.

A House GOP aide said Boehner outlined next steps regarding the payroll tax measure during the conference call.

"The speaker described three possible options -- accept the Senate bill, go to conference, or amend the Senate bill and send it back," the aide said.

The pipeline, thought to be a necessary part of coaxing Republican support for the payroll tax break, is something Obama rejected when the idea first emerged of linking it to the payroll tax issue.

When asked about the president's support of the bill despite the pipeline provision, a senior administration official said Friday that Obama's top priority was making sure taxes don't go up in the new year.

The Obama administration has delayed a final decision on the project after complaints by environmentalists and Nebraska officials that the pipeline route could threaten that state's Sandhills region and vital Ogallala aquifer.

Alternate routes are being considered, and Nebraska officials as well as the pipeline company, TransCanada, acknowledge that the process of approving a final route will last into the second half of 2012.

The State Department has warned that a shortened deadline would leave insufficient time to assess the route alteration on a project that would transport oil from Canada's tar sands in northern Alberta to refineries on the Gulf Coast of Texas.

Obama made no mention of the proposed pipeline during Saturday's press conference. But in a briefing with reporters held after Obama's remarks, senior administration officials called the vote a win for working people and insisted the administration had given no ground on the pipeline issue.

Senate Minority Leader Mitch McConnell, R-Kentucky, said he had no idea why the pipeline is considered controversial.

"The labor unions like it. Many Democrats want it," he added. "It strengthens our national security by decreasing the amount of oil we get from unfriendly countries. And it wouldn't cost the taxpayers a dime."

Republicans, who traditionally back the oil industry, have accused the White House of delaying the issue until after Obama's re-election bid. Labor unions that typically support Democrats back the pipeline project, while environmentalists who are also allied with the political left oppose it.

House Republicans pushed through their own version of a payroll tax measure this week that also included the pipeline provision. However, it lacked Senate support and never came up for a vote.

Saturday's Senate bill is expected to reduce the deficit by nearly $3 billion, according to the Congressional Budget Office.

Under the plan, its $33 billion in costs would be offset by an increase in fees that new homeowners with federally backed mortgages will pay to Fannie Mae, Freddie Mac and the Federal Housing Administration. Those entities would then turn that money over to the U.S. Treasury.

The bump amounts to about $15 per month for every $200,000 loaned, Senate aides estimated.

CNN's Rebecca Stewart, Athena Jones, Deirdre Walsh, Ted Barrett, Kate Bolduan and Erin Burnett contributed to this report.

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