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House leader rejects Senate payroll tax plan

By Tom Cohen, CNN
updated 5:33 PM EST, Sun December 18, 2011
House Speaker John Boehner apparently reversed his position on the extension after caucus opposition, a GOP source says.
House Speaker John Boehner apparently reversed his position on the extension after caucus opposition, a GOP source says.
STORY HIGHLIGHTS
  • NEW: A "devastating tax hike" looms without House action, the White House says
  • Boehner says he wants more negotiations on the payroll tax issue
  • Pelosi says tea party Republicans in the House are stalling progress
  • An Obama adviser says the House is unlikely to reject the Senate plan

Washington (CNN) -- House Speaker John Boehner said Sunday that he opposed a temporary extension of a payroll tax cut, saying the two-month plan passed by the Senate "is just kicking the can down the road."

Boehner, R-Ohio, urged Congress to continue negotiations Monday to come up with a compromise that would extend the current payroll tax rate for a full year, as the Obama administration wants.

"Two months is just kicking the can down the road. The American people are tired of that," Boehner told NBC's "Meet the Press." He said both the Senate and the House of Representatives should work out their differences and pass a one-year extension.

But congressional Democratic leaders said the Republican-led House would be blamed for a year-end increase in working Americans' tax bills if it failed to go along with the Senate. The White House chimed in Sunday afternoon, noting that the current rates expire in less than two weeks.

"As the president said yesterday, it is inexcusable to do anything less than extend this tax cut for the entire year, and Congress must work on a one-year deal," White House Communications Director Dan Pfeiffer said in a written statement.

Pfeiffer pointed out that Boehner had called the two-month extension a "good deal" only Saturday.

"It's time House Republicans stop playing politics and get the job done for the American people," he said.

The payroll tax break, which averages about $1,000 a year for an average family, runs out at the end of the year unless Congress votes to extend it. The battle extends beyond the usual Democratic-Republican wars to also include a face-off between the House and Senate over their respective plans that so far have been unable to win support in both chambers.

CNNMoney: What happens if payroll tax cut is not extended?

The Democratic-led Senate passed the two-month extension Saturday on an 89-10 vote, with support from most of the chamber's GOP minority. That was a fallback position after Democrats and Republicans were unable to reach a comprehensive agreement to extend the payroll tax cut and unemployment benefits for a full year.

Senate Majority Leader Harry Reid, D-Nevada, said in a statement Sunday that Boehner had earlier left it to Senate leaders to come up with a deal, and now was changing his tune after the Senate easily adopted the two-month extension.

"Neither side got everything they wanted, but we forged a middle ground that passed the Senate by an overwhelming bipartisan majority," Reid said. "If Speaker Boehner refuses to vote on the bipartisan compromise that passed the Senate with 89 votes, Republicans will be forcing a thousand-dollar tax increase on middle class families on January 1st."

In addition, a Senate Democratic aide told CNN the chances were "zero" that the Senate would reconvene from its holiday recess to continue negotiating with the House on the issue.

A statement Sunday from the office of House Majority Leader Eric Cantor, R-Virginia, said the House will convene Monday to either amend the Senate bill or pass a motion to send the issue to a conference committee involving members of both chambers.

An earlier House version of the payroll tax measure lacked support in the Senate and never came up for a vote there.

Does House want to move forward? Two senators debate that question

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 for its two-month plan made House rejection unlikely.

"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," Sperling told CNN Political Correspondent Joe Johns.

In addition, Sperling said the strong bipartisan support in the Senate made eventual approval of a one-year extension more likely.

The Senate measure is the latest in a series of last-ditch temporary fixes, in this case seeking to postpone another legislative showdown until February, when the bill's provisions would expire.

However, it requires approval by the House, and Boehner's comments indicated rejection by House Republicans, especially conservatives who don't like the payroll tax extension in any form.

Under the current party breakdown in the House, at least 26 Republicans would have to join a unanimous Democratic minority to pass the Senate measure. Any slippage in Democratic support would require more Republican backing.

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.

The source said Boehner described the Senate vote as "a good deal" and "a victory" in the conference call, and that Oklahoma Rep. Tom Cole and North Carolina Rep. Walter Jones also expressed support.

However, Cantor disagreed during the call, saying he thought the package should be extended for a full year, the Republican source said.

"The rank-and-file members are extremely opposed to it," said the GOP source, adding that most members were concerned with the uncertainty caused by just a two-month extension, as well as the political benefit the White House could gain in the national dialogue over taxes.

A House GOP aide said Sunday that Boehner outlined the next steps regarding the payroll tax measure during the conference call, but wasn't advocating for the Senate plan.

"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.

On Sunday, Boehner was not asked about the caucus conference call in the NBC interview.

House Minority Leader Nancy Pelosi, D-California, said in a statement Sunday that it was conservative House Republicans standing in the way of an agreement.

"By holding up this bipartisan compromise, tea party House Republicans are walking away once again, showing their extremism and clearly demonstrating that they never intended to give the middle class a tax cut," Pelosi said.

Reid and fellow Democratic Sen. Charles Schumer of New York said the issue involved Boehner's ability to lead his caucus.

"This is a test of whether the House Republicans are fit to govern, and it is a make-or-break moment for John Boehner's speakership," Schumer said in a statement. "You cannot let a small group at the extreme resort to brinksmanship every time there is a major national issue and try to dictate every move this nation makes."

According to Schumer, Boehner gave Senate Republican leader Mitch McConnell of Kentucky "his proxy to negotiate a bipartisan compromise."

"This compromise was good enough for Mitch McConnell and Marco Rubio. It was good enough for Jon Kyl and Tom Coburn. It should be good enough for Speaker Boehner," Schumer said, naming conservative Republican senators who supported the plan. "The speaker needs to put the Senate's bipartisan compromise on the floor and let House Democrats and the remaining sane members of the House Republican caucus vote for it."

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."

Reid 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 extends unemployment benefits and avoids cutting federal funds to physicians who accept Medicare. In addition, it speeds up a decision over an oil pipeline, giving the White House 60 days to make a call on the controversial Keystone XL project.

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

The Obama administration delayed a final decision on the project until 2013 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 -- as called for in both the Senate and House versions of the payroll tax plan -- 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.

McConnell 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.

Saturday's Senate measure 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 borrowed, Senate aides estimated.

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

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