House GOP to release payroll-tax-holiday proposal on Thursday

Republicans will release their proposal for extending a payroll-tax holiday Thursday.

The package will also include an extension of federal unemployment benefits and a provision to increase payments to physicians under Medicare. GOP leaders announced their plans at a conference meeting Wednesday.

ADVERTISEMENT
Republicans would pay for the programs with spending cuts and by trimming the federal workforce. Non-tax revenue raisers such as spectrum sales are also being contemplated.

The GOP has been divided over whether to extend the payroll-tax holiday, an idea championed by President Obama. Many Republicans argue that the temporary tax cut has had a minimal effect on economic growth, but GOP leaders have thrown their clout behind it, in part from worry their party could lose its anti-tax image.

Given the division in the conference, party leaders want to hash out their plan with members before introducing it formally. Speaker John Boehner (R-Ohio) said Wednesday leaders are “continuing to talk to members” about the payroll tax and acknowledged there was a debate about its effectiveness as economic stimulus.

“I think it’s important for us to have these deliberations with our colleagues before we introduce a bill, and we’ll do it just that way,” he said.

Obama is portraying Republicans as protecting the wealthy’s interests at the expense of the middle class, and has used GOP resistance to the payroll tax as a weapon. 

There were some signals Wednesday that key conservatives were rallying around their leadership’s argument that the party must extend the payroll-tax cut. 

“I have always come from the premise [that] letting families keep their money is a good thing, so extending the tax cuts is good … in and of itself,” said Rep. Jim Jordan (Ohio), chairman of the conservative Republican Study Committee. “If it is going to be paired with unemployment [benefits], then we are going to need to see some reforms, and we are going to get some of that.”

Jordan’s support would be an important milepost in Boehner’s effort to quell his rank and file’s skepticism on the payroll-tax extension.

Rep. Paul Ryan (R-Wis.), who previously had disparaged the payroll holiday as a “sugar high,” said the “machinations” under way are all about how to pay for the tax break.

Ryan said permanent tax cuts are always preferable to temporary tax holidays, which he said have more limited economic benefits. But he then explained that he can support the tax break if it is pared with real spending cuts.

“If we can cut spending and let people keep more of their money, then I am for it,” he said.

The Senate will vote Friday on a payroll-tax holiday that is offset with a surtax on millionaires.

Lawmakers described Wednesday’s GOP meeting as a political rally.

“It was a rah-rah, let’s go beat them meeting,” Rep. Chuck Fleishmann (R-Tenn.) said.

ADVERTISEMENT
Jordan said he hoped to win reforms of federal unemployment benefits, such as requirements that recipients undergo training.

“We are going to get that,” he said.

Jordan said he is in favor of simply extending the payroll-tax holiday, but said he would be even more pleased if the payroll-tax extension also included a provision that cleared the Keystone XL pipeline for construction.

Republicans have talked about pairing those measures to build support for the package.

Rep. James Lankford (R-Okla.) said he and other members have been pushing leaders to include a tax holiday for companies repatriating overseas profits and changes to Social Security.

Rep. Jeff Landry (R-La.) proposed raising the retirement age for anyone who accepts the payroll-tax holiday, which lowers a tax that funds Social Security.

Lankford acknowledged that leaders did not like this proposal, but said that other reforms are now being discussed.

“Members have had a lot of individual meetings with leadership and have given them a lot of documents. It will be up to them to come back to us tomorrow with their proposal,” he said.

Russell Berman contributed to this story.

— This story was posted at 10:37 a.m. and last updated at 12:35 p.m.