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House Republicans scrap direct vote on Senate payroll tax plan

By Tom Cohen and Alan Silverleib, CNN
December 20, 2011 -- Updated 1533 GMT (2333 HKT)
House Speaker John Boehner apparently reversed his position on the extension after caucus opposition, a GOP source says.
House Speaker John Boehner apparently reversed his position on the extension after caucus opposition, a GOP source says.
STORY HIGHLIGHTS
  • House Republicans continue their push for congressional consideration of a full-year extension of the payroll tax cut
  • Democrats say Republicans probably lack the votes to defeat the two-month Senate plan
  • Reid says Senate Democrats won't agree to House GOP demands to restart talks

Washington (CNN) -- Congress showed little sign Tuesday morning of resolving its partisan standoff over an extension of the payroll tax cut as the GOP-controlled House of Representatives moved forward plans to push for an immediate yearlong continuation -- a move which now appears to have little chance of success in the Democratic-controlled Senate.

The Senate voted 89-10 in favor of a two-month extension on Saturday, but that short-term compromise has slammed into a conservative roadblock in the House, where rank-and-file Republicans are fuming over the short-term nature of the plan, among other things.

A Republican-led congressional panel on Monday night rejected a Democratic motion to allow a full House vote on the Senate plan -- a move top Democrats characterized as a sign of weakness on the part of House Speaker John Boehner, R-Ohio, and other House GOP leaders.

The House is instead expected to hold votes Tuesday on a measure calling for the issue to be taken up by a House-Senate conference committee, as well as on a resolution supporting a year-long extension of both the payroll tax cut and emergency federal unemployment benefits.

House Republicans are also pushing for a new, two-year "doc fix," or delay in significant scheduled pay cuts to Medicare physicians.

All three measures are currently set to expire December 31.

Standoff over payroll tax cut: What do you think?

The political consequences of a failure to act could have major economic and political consequences. The payroll tax break alone is worth roughly $1,000 a year for an average family and affects roughly 160 million Americans. Numerous observers believe President Barack Obama is preparing to parrot Harry Truman's 1948 campaign next year by running against an unpopular, dysfunctional Congress controlled partly by the GOP.

House GOP leaders' decision not to hold a vote on the $33 billion Senate plan -- an apparent reversal of earlier plans -- came after a two-hour meeting of the entire House Republican caucus late Monday.

House Minority Leader Nancy Pelosi, D-California, told reporters that the change probably meant Boehner and his lieutenants lacked enough support from their own members to defeat the Senate bill.

"My guess is that they are afraid that their members are not going to stick with them," Pelosi said.

In the 434-member House chamber -- one seat is currently vacant -- the 242-seat Republican majority can only afford 26 defections to overcome a unified 192-seat Democratic minority.

South Carolina Rep. James Clyburn, part of the House Democratic leadership, said Monday night his party's caucus was 99% in support of the Senate measure.

A House GOP leadership aide conceded to CNN that it is a "cleaner message" to simply vote to affirm the House position on extending the payroll tax cut for a year, instead of opposing a two-month extension.

Another GOP aide said Republicans now believe it makes more sense for them to have an "affirmative vote" instead of a "negative one."

Earlier, House GOP leaders announced that votes on the issue would take place Tuesday instead of Monday night, as originally planned. Majority Whip Kevin McCarthy, R-California, told reporters that it was better to hold the votes "not in the dark of night but in the light of day."

The political drama followed a day of escalating brinksmanship as legislators stepped up their game of chicken over the expiring payroll tax cut.

Democrats flatly rejected Boehner's demand to ditch the two-month extension passed by the Senate last week in favor of an immediate one-year continuation. Boehner and other GOP leaders argue that the two-month proposal amounts to a short-term fix instead of resolving the issue to provide certainty to American taxpayers and businesses.

"We outright reject the attempt by the Senate to kick the can down for 60 days," Majority Leader Eric Cantor, R-Virginia, said after Monday night's caucus meeting.

Senate Majority Leader Harry Reid, D-Nevada, has said he has no intention of considering the new GOP plan. On Monday, he blasted Boehner for allegedly abandoning the Senate compromise.

"I negotiated a compromise (with Senate Minority Leader Mitch McConnell, R-Kentucky) at Speaker Boehner's request. I will not reopen negotiations until the House follows through and passes this agreement that was negotiated by Republican leaders and supported by 90 percent of the Senate," Reid said.

White House Press Secretary Jay Carney called Boehner's stance "nonsensical," stating that it "takes compromise to get something done" under divided government.

"Americans paying attention to this must be pulling their hair out," Carney said.

Boehner, however, said Monday night that "we disagreed with what the Senate produced."

"They did their job," he said of his call last week for the Senate to send the House a proposal. "They produced a bill, and the House disagreed with it."

While there are sharp differences over how to proceed, both the House and Senate versions of the legislation extend the tax cut, unemployment benefits and the doc fix. Both measures also would push for presidential action on the proposed Keystone XL oil pipeline from Canada to the Gulf of Mexico -- something demanded by Republicans.

Among the obstacles facing a possible conference committee to hash out the differences: the Senate has already adjourned for the year and is on its holiday break. Also, Pelosi has said she has no intention of appointing members to a conference committee without getting an opportunity for a direct vote on the Senate proposal.

Both Pelosi and Reid have said such negotiations should happen when Congress returns from its holiday recess in January, after the Senate's two-month payroll tax-cut extension has passed.

Rep. Steny Hoyer of Maryland, the No. 2 House Democrat, said Monday that the maneuvers by House Republicans show they never supported a payroll tax decrease in the first place.

On Monday, at least five mostly moderate Republican senators voiced disapproval with the possible defeat of the Senate plan, demonstrating increasing pressure on House Republicans to pass it.

The group included Massachusetts Sen. Scott Brown, Maine Sens. Olympia Snowe and Susan Collins, Indiana Sen. Richard Lugar and Nevada Sen. Dean Heller.

"During this time of divided government, both parties need to be reasonable and come to the negotiating table in good faith," said Brown, who is facing a stiff re-election challenge in heavily Democratic Massachusetts next year. "We cannot allow rigid partisan ideology and unwillingness to compromise stand in the way of working together for the good of the American people."

Meanwhile, five Democratic senators called on House Republicans to pass the Senate plan in order to speed up approval of the Keystone pipeline.

Congressional Democratic leaders insist the Republican-led House will be blamed for a year-end increase in working Americans' tax bills if it fails to go along with the Senate.

"This is a pass-the-popcorn moment for Democrats," one senior congressional Democratic leadership aide told CNN Monday. "Boehner has been hung out to dry by his caucus, and we are not going to save him."

CNNMoney: What happens if payroll tax cut is not extended?

Boehner appears to have reversed himself since a conference call with caucus members Saturday, when he was the only House Republican leader to express support for the Senate plan, according to a GOP source.

The source said Boehner described the Senate vote as "a good deal" and "a victory" in the conference call. For his part, the speaker insisted Monday that he raised concerns about the Senate plan "from the moment I heard of it."

Boehner said he only praised a provision in the Senate bill requiring presidential action on the Keystone pipeline.

"The rank-and-file members are extremely opposed" to the Senate plan, a GOP source stressed, adding that most members were concerned with the uncertainty caused by just a two-month extension, as well as the political benefit the White House could gain in the national dialogue over taxes.

The Senate's two-month measure would reduce the deficit by nearly $3 billion, according to the Congressional Budget Office.

Under the plan, its $33 billion in costs would be offset by an increase in fees that new homeowners with federally backed mortgages will pay to Fannie Mae, Freddie Mac and the Federal Housing Administration. Those entities would then turn that money over to the U.S. Treasury.

The bump amounts to about $15 per month for every $200,000 borrowed, Senate aides estimated.

Most senators agreed on a two-month extension as a fallback position after Democrats and Republicans were unable to reach a more long term, comprehensive agreement

CNN's Athena Jones, Rebecca Stewart, Deirdre Walsh, Ted Barrett, Kate Bolduan, Dana Bash, and Erin Burnett contributed to this report.

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