By Russell Berman and Bernie Becker - 12/01/11 01:40 AM EST
House Republican leaders warned their caucus the GOP risks losing its image as the party opposed to tax hikes if it allows the one-year payroll tax break to expire at the end of the year.
Majority Leader Eric Cantor (R-Va.) told his rank and file in a closed-door meeting Wednesday that “taxes are a Republican issue and you aren’t a Republican if you want to raise taxes on struggling families to fund bigger government,” according to a source in the room.
The leadership bid for support represents the GOP’s clearest endorsement yet of the tax extension, which is a cornerstone of President Obama’s jobs plan.
On the other side of the Capitol on Wednesday, Senate Republicans rolled out their own plan to extend the current payroll tax cut for another year.
Having dismissed the Democratic proposal to offset payroll tax relief with a surtax on millionaires, the GOP proposal, from Sen. Dean Heller of Nevada, would instead look to expand a pay freeze for federal civilian employees to five years, cut the federal workforce by 10 percent and trim certain federal benefits for wealthy Americans. While the Democratic plan would both extend and expand the tax cut, the GOP proposal simply prolongs the current tax holiday.
Both the Democratic and Republican proposals in the Senate could see procedural votes as early as Thursday.
In a statement, Senate Republican leader Mitch McConnell (Ky.) said the proposal would extend current payroll tax relief without imposing the Democratic tax hikes.
“It’s important to underscore, however, that the only reason we’re even talking about extending a temporary cut in the payroll tax is because President Obama’s economic policies have failed working Americans,” McConnell said.
A spokesman for Senate Majority Leader Harry Reid (D-Nev.) praised the Republicans for having “seen the light” on the payroll tax, but said their proposal wasn’t good enough.
The Democratic plan “would put more money in the pockets of middle-class families and create more jobs,” said the spokesman, Adam Jentleson. “The Republican proposal cannot pass the Senate as it stands, but now that Republicans have reversed their position on this middle-class tax cut, we look forward to working with them to negotiate a consensus solution.”
Obama campaigned for his plan Wednesday in Scranton, Pa., where he backed the Senate Democratic proposal without mentioning that Republicans were formulating their own payroll tax proposal. He urged an audience in the key battleground state to urge their representatives not to “be a Grinch.”
“What happened? Republicans said they’re the party of tax cuts,” the president said. “How is it they can break an oath when it comes to raising your taxes but not when it comes to wealthy people?”
Obama cited the “pledge” most Republicans have signed not to raise taxes, though he didn’t name its author, conservative activist Grover Norquist. He also pushed for an extension of unemployment insurance benefits.
Approving a centerpiece of the Obama jobs plan could be a difficult lift for House Republicans, and leadership aides acknowledged that “more debate was needed” before the conference’s position solidifies. GOP leaders scheduled an “emergency” conference meeting, its second meeting of the week, for Friday.
While the GOP leadership endorsed the initial payroll tax cut as part of a broader tax deal in December that extended the Bush-era marginal income rates, the party’s 87 freshmen were not in Congress at the time.
Republicans prefer a permanent overhaul of the tax system, rather than temporary changes that Budget Committee Chairman Paul Ryan (R-Wis.) earlier this year derided as “sugar-high economics.” The chairman of the House GOP’s campaign arm, Rep. Pete Sessions (Texas), also criticized the payroll tax cut extension in the fall, calling it “a horrible idea.”
“These are policies we would support. It’s not necessarily the policies we will use,” a House GOP leadership aide said of the Senate GOP’s proposed offsets.
The top Democrat on the Budget Committee, Maryland Rep. Chris Van Hollen, whose district contains many federal workers, blasted the GOP plan as a cynical attempt to single out government employees.
“Republicans cite the Simpson-Bowles plan as a guide for their proposals, which is deeply misleading,” Van Hollen said in a statement. “Simpson-Bowles presented a balanced plan to share responsibility, while the GOP has proposed the opposite.”
Earlier Wednesday, House Speaker John Boehner (R-Ohio) told reporters that Republicans support extending the payroll tax cut but that “there’s no debate” about whether the measure should be paid for.
“We’re going to continue to seek common ground on this issue,” Boehner told reporters after a House GOP conference meeting. “There’s no debate, though, on whether these extensions ought to be paid for. The president’s called for them to be paid for, Democrats here have called for them to be paid for and so if in fact we can find common ground on these extensions, I think you can take to the bank that they will be paid for.”
— Erik Wasson and Alicia M. Cohn contributed to this report.