House rejects two-month tax cut

WASHINGTON — The House voted Tuesday to shelve a plan that would have extended a 2 percent Social Security payroll tax cut for two months, throwing Congress into fresh disarray in the midst of the holiday season.

The 229-193 vote that was engineered by majority Republicans rejected a temporary agreement that had passed the Senate last weekend with GOP support and had been embraced by President Barack Obama.

Instead the House voted to form a conference committee in the hopes of negotiating another deal with the Senate just days before the tax cuts expire at the end of the year.

If Congress does not pass a bill by then, payroll taxes would increase for 160 million workers on Jan. 1. Also, jobless benefits would begin to expire for more than 2.1 million people who have been unemployed for extended periods.

Some 28,100 Nevadans would see their unemployment payments end by Feb. 18, according to the Department of Labor. As for payroll taxes, Democrats said 1.2 million Nevada workers would see their taxes rise on Jan. 1, to what would amount to an average $1,066 for the year.

House Republicans contended the two-month extension was not long enough to provide certainty to taxpayers and businesses. "A two-month extension is nothing more than kicking the can down the road," House Speaker John Boehner, R-Ohio, said after the vote.

But Obama, speaking to reporters at the White House after the vote, said Republicans were using the payroll tax issue to force concessions on other issues. A GOP bill that passed the House last week would have extended the tax cut for a year but also included spending cuts opposed by Democrats and reductions in unemployment benefits.

Obama said the Senate bipartisan compromise is the "only viable way" to prevent a tax increase on Jan. 1.

"The clock is ticking. Time is running out," Obama said.

As they had announced, Reps. Joe Heck and Mark Amodei, both R-Nev., voted to reject the two-month bill.

"The 60-day extension is not workable from an implementation standpoint," Amodei said. "It does not give Nevadans the stability and predictability that they deserve. And if recent history is any indication, waiting 60 days doesn’t mean anything will get accomplished."

Rep. Shelley Berkley, D-Nev., voted for the bill. In a short speech, she accused Republicans of trying to sink the tax cut by sending it to an uncertain fate.

"House Republicans are trying to kill this middle-class tax relief bill by burying it in one more Washington bureaucracy," Berkley said. "Death by committee."

The vote tossed the ball into the court of Senate Majority Leader Harry Reid of Nevada, who said again he had no plans to negotiate with House Republicans until they pass a two-month extension.

"As the clock ticks towards a middle-class tax hike, I would implore Speaker Boehner to listen to the sensible Senate Republicans and courageous House Republicans who are calling on him take the responsible path, and pass the Senate’s bipartisan compromise to hold middle-class families harmless while we negotiate a yearlong extension," Reid said.

"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," Reid said.

The Senate’s short-term approach would renew a 2 percentage point cut in the Social Security payroll tax, plus jobless benefits averaging about $300 a week for the long-term unemployed, and would prevent a 27 percent cut in Medicare payments to doctors.

The $33 billion cost would be financed by a 0.10 percentage point hike in home loan guarantee fees charged by mortgage giants Fannie Mae and Freddie Mac, which the administration says would raise the payment on a typical $210,000 loan by about $15 a month.

Until this weekend, it was assumed that Boehner had signed off on the Senate measure. After all, it was agreed to by Boehner’s trusted confidante, Senate GOP Leader Mitch McConnell of Kentucky. Boehner declined on several occasions Friday to reject the idea.

But rank-and-file House Republicans erupted in frustration at the Senate measure, which drops changes to the unemployment insurance system pressed by conservatives, a freeze in the salaries of federal workers and cuts to Obama’s health care law.

Also driving their frustration was that the Senate, as it so often does, appeared intent on leaving the House holding the bag — pressuring House lawmakers to go along with its plan. The Associated Press contributed to this report. Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.

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