U.S. House Republicans push for new payroll tax cut talks

WASHINGTON Tue Dec 20, 2011 4:15am GMT

White House spokesman Jay Carney points to a payroll tax cut extension count down monitor in the briefing room of the White House in Washington December 19, 2011. House Speaker John Boehner effectively killed a short-term tax break and called on lawmakers to negotiate a full year payroll tax cut extension for 160 million U.S. workers. REUTERS/Jason Reed

White House spokesman Jay Carney points to a payroll tax cut extension count down monitor in the briefing room of the White House in Washington December 19, 2011. House Speaker John Boehner effectively killed a short-term tax break and called on lawmakers to negotiate a full year payroll tax cut extension for 160 million U.S. workers.

Credit: Reuters/Jason Reed

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WASHINGTON (Reuters) - The Republican-led U.S. House of Representatives will set the stage on Tuesday for a showdown with Senate Democrats over a payroll tax cut extension that is becoming a proxy for 2012 election year battles.

The tax legislation has become the latest in a string of battles in Congress this year, all of which have contributed to widespread public discontent with Washington politicians.

When the House votes on Tuesday it will in effect be rejecting a bill that passed the Senate overwhelmingly on Saturday and calling for formal negotiations with the Democratic-led Senate.

The Senate bill would set a two-month extension of the payroll tax cut with the aim of crafting a full-year tax cut extension early next year.

The House move will cast doubt on the future of the popular payroll tax cut, which is caught up in a high-stakes game of brinkmanship between the two political parties that some say could backfire.

Washington gridlock is fuelling an anti-incumbent mood among voters heading into next year's elections.

"Our members do not want to just punt and do a two-month short-term fix where we have to come back and do this again," House Speaker John Boehner said late on Monday after a closed meeting with fellow Republicans.

Senate Majority Leader Harry Reid shot back that the House should allow an up-or-down vote on the two-month stop-gap plan. "I am happy to continue negotiations on a yearlong deal as soon as the House of Representatives passes the Senate's bipartisan compromise, and prevents a tax hike from hitting middle-class families," Reid said.

Several Republican lawmakers publicly agreed with Reid.

The bipartisan two-month deal crafted by the Senate came after efforts at a full-year tax cut failed.

At stake is much more than politicians' reputations and their 2012 re-election chances. If Democrats and Republicans cannot agree on extending the tax cut that expires on December 31, 160 million Americans will begin 2012 with less money - about $1,000 (644.33 pounds) a year for the average worker - in their paychecks.

That, economists fear, could dampen, or even end what little economic growth there is as the United States struggles to right itself after the deepest recession in decades and severe debt problems in Europe that could infect America.

Not only would workers' taxes go up in a couple weeks if the two sides cannot find a quick compromise. About 2.2 million people who have suffered long-term unemployment will see benefit checks cut off by the middle of February. And doctors treating elderly Medicare patients also will see their reimbursements cut.

Once the House on Tuesday requests a new round of negotiations, as expected, the next steps are unclear.

"We are not coming back, we are not appointing negotiators until they pass the Senate compromise," Reid's spokesman Adam Jentleson insisted.

President Barack Obama already has delayed a Hawaii vacation. White House Press Secretary Jay Carney on Monday said, "The president has made clear that he wants Congress to get this done, that he is here now and will be here as Congress tries to sort this out." But Carney did not make clear how Obama might bring the two sides together, or whether he will even try.

(Editing by Christopher Wilson)

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