McConnell Adds Fuel to the Fire over GOP Tax Cut
Policy + Politics

McConnell Adds Fuel to the Fire over GOP Tax Cut

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More bad news for House GOP leaders in their payroll tax cut contretemps. Senate Republican Leader Mitch McConnell of Kentucky on Thursday urged his House GOP colleagues to give up and pass a short-extension of a Social Security payroll tax cut and unemployment benefits,  as President Obama and congressional Democrats are insisting.

Breaking his silence after days of mounting controversy over the GOP’s botched handling of the tax cut extension, McConnell strongly advised House Speaker John Boehner, R-Ohio, to push through a bipartisan Senate-passed measure that would extend a two-percentage point tax cut and additional unemployment insurance benefits for two months to give the two parties additional time to negotiate a year-long compromise.

“House Republicans sensibly want greater certainty about the duration of these provisions, while Senate Democrats want more time to negotiate the terms,” McConnell said. “These goals are not mutually exclusive. We can and should do both. Working Americans have suffered enough from the President’s failed economic policies and shouldn’t face the uncertainty of a New Year’s Day tax hike.”

McConnell’s statement was music to the ears of Democrats, who have been pounding away at Boehner and House Republicans for displaying scant concern about the plight of middle class Americans and the unemployed by blocking a vote in the House on the Senate-passed measure that was crafted by McConnell and Senate Majority Leader Harry Reid, D-Nev., and overwhelmingly passed by the Senate last Saturday with 39 of the Senate’s 47 GOP votes.

But Boehner and House Majority Leader Eric Cantor spent the morning insisting that the most sensible solution is for all sides to come to the bargaining table now to iron out their differences on a one year extension of the tax cut and unemployment benefits, to provide certainty to the 160 million Americans affected by the payroll tax and their employers who must process any changes in the tax code.

Cantor told reporters this morning that with President Obama still in town while his family is vacationing in Hawaii, it wouldn’t take much to quickly hammer out an agreement – a notion dismissed as fantasy by the White House and congressional Democrats who say it would take days just to set up a formal negotiation structure. “It will not take a long time,” Cantor insisted. “We can probably resolve the differences within an hour. That’s why we’re here” at the Capitol.

A spokesman for Boehner was decidedly cool to the McConnell statement. "We believe, as Senator McConnell suggested, the two chambers should work to reconcile the two bills so that we can provide a full year of payroll tax relief — and do it before year's end," said Boehner spokesman Kevin Smith, according to the Associated Press.

But clearly, the House Republicans are beginning to feel the heat, with about 10 Senate prominent Senate Republicans, including McConnell and Sen. John McCain of Arizona, saying the House Republicans are making a huge mistake by not passing a short-term extension, a broad range of Republican political analysts fretting that Republican were badly ceding middle class support to Obama and the Democrats and the conservative Wall Street Journal editorial board bemoaning that House Republicans may have all but assured Obama’s reelection next year.

McCain said today that Congress' failure to reach agreement on legislation extending a payroll tax cut for working Americans "hurts the Republican Party” and that he feels sorry for average Americans who will be “innocent bystanders” if the tax break and extended unemployment benefits expire amid a shaky economy.

House Ways and Means Committee Chairman Dave Camp, R-Mich., provided the first sign of a crack in the House GOP united front by suggesting he would be open to a three-month extension. He floated the idea in an appearance on CNBC.

In defending the House GOP position, Boehner said he told Obama in a phone conversation yesterday, “There’s one big reason why we need to do a full year, and that’s jobs.”

“A one year bill, like the [originally] president requested and like the House produced is simply better for jobs and better for our economy. A one-year bill provides on average about $1,000 for workers as opposed to the Senate bill, which would provide a measly $166. And importantly, a one-year bill would provide certainty for American employers as they begin to plan for next year. A two month extension only perpetuates the uncertainty that too many employers already have in dealing with the economy and what’s coming out of Washington.”

McConnell, one of the shrewdest strategists on Capitol Hill, has played an intriguing game throughout the controversy. When it became apparent that Republicans, Democrats and the administration were still far apart on questions of the scope of the overall legislation and how to pay for it, he teamed up with Reid to craft a two-month extension of the payroll tax, added benefits for those about to exhaust their unemployment insurance, and a measure to prevent a deep reduction in Medicare reimbursement rates for doctors to take effect, the so-called “Doc Fix.”

As an added incentive for Republicans to support the compromise, McConnell won inclusion of a provision that would force the administration to speed up its review of the proposed Keystone XL oil pipeline, which is favored by industry and GOP leaders but strongly opposed by environmentalists. McConnell gave every appearance last Saturday that the compromise legislation would be the Senate’s final word on the subject before adjourning for the year, and he aggressively recruited his Republican colleagues to support passage. The bill was adopted, 89 to 10.

Boehner strongly signaled he would support the compromise and sell it to his House members. But after Tea Party conservatives went ballistic after learning the details of the plan and how it would be funded, Boehner backed down last Sunday and said he would oppose the Senate plan and insist that the two sides begin negotiations on a one-year plan more to the liking of House conservatives.

And that’s where things stood until McConnell dropped his bombshell this morning, siding with the Democrats in calling for swift enactment of a short-term extension of the tax cut and unemployment benefits.

“The stakes are too high to be arguing about politics and process,” House Democratic Whip Steny Hoyer of Maryland said today. “The Republican contention that the two month extension is somehow unworkable is simply untrue. If it were we wouldn’t see a new and desperate Republican proposal today to settle on a three month extension.”