House's next move on payroll tax unclear

Senate Democrats might have formulated their next steps for dealing with the expiring payroll tax cut, but it’s another story on the other side of the Capitol Rotunda.

House Speaker John Boehner (R-Ohio) said last week that Republicans would be willing to talk with President Obama on extending the payroll tax cut, echoing what GOP leaders said when the president unveiled his $447 billion jobs package in September.

House GOP leaders appear to want to deal with items like the payroll tax cut, as well as unemployment insurance and the Medicare doc fix, by year's end. But with the congressional supercommittee having failed its mandate to cut the federal deficit just a week ago, leadership also needs to check in further with the rank-and-file on those issues.

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With top Republicans having also expressed skepticism about giving the tax break a second year, the chamber has yet to schedule a vote over whether to extend the payroll tax cut, and aides say the House is still considering its options.

“It is likely that debate will begin anew as Congress returns next week and considers how to proceed on the business that remains,” Michelle Dimarob, a spokeswoman for the House Ways and Means Committee, told The Hill in a statement last week.

Meanwhile, Obama is scheduled to head to Scranton, Pa., on Wednesday to lobby for a payroll tax cut extension — the second time in as many weeks the president has hit the road to talk up this signature part of his jobs plan.

For its part, the Senate is expected to take a vote on extending the tax cut as soon as this week, and Democrats in the chamber have proposed paying for the tax break with a surtax on millionaires.

Senate Republicans have unanimously voted against Democratic jobs initiatives in recent months because they were to be offset by surtaxes, putting the fate of the payroll tax extension in serious doubt.

But Sen. Charles Schumer of New York, who helps craft Democratic messaging, said Sunday that he found it hard to believe Republicans would oppose an extension of the tax break.

“They spent so much time fighting to preserve the Bush tax cuts for the millionaires, it's hard to believe they wouldn't want to preserve a tax cut for the middle class,” Schumer said on NBC’s “Meet the Press.”

But Arizona Sen. Jon Kyl, the No. 2 Republican in the chamber, in an appearance on “Fox News Sunday” also said the payroll tax cut had not proven to be particularly stimulative.

Economic analysts have said that not extending the payroll tax cut and unemployment benefits would take much-needed funds out of the economy.

House Republicans have expressed concerns about the cost of continuing the payroll tax cut, and have also said that policymakers should look to spark the economy through more permanent tax changes. 

The current payroll tax cut, enacted in last December’s compromise that extended the Bush tax cuts, is projected to lower government revenues by $112 billion in 2011. The tax break expires at the end of December.

House Majority Leader Eric Cantor (R-Va.) and Reps. Dave Camp (R-Mich.), the Ways and Means chairman, and Paul Ryan (R-Wis.), the Budget chairman, are among the key House Republicans who have not embraced extending the tax cut.

Some House Democrats are also worried about extending the payroll tax break, given that the levy funds Social Security.

In his jobs plan, the president proposed expanding the payroll tax cut in addition to giving it a second year.

Under the president’s plan, workers would pay 3.1 percent on their first $110,100 of wages in 2012, and the payroll tax cut would be extended in certain cases to employers. The payroll tax rate for workers in 2011 is 4.2 percent, down from 6.2 percent.

Analysts have said that the average family will get to keep an extra $1,000 in 2011 due to the payroll tax cut, and the White House says the expanded 2012 proposal would allow families to save an average of $1,500.

In his appearance in New Hampshire last week, Obama urged the crowd to press their lawmakers to back a payroll tax cut extension.

This story was updated.