WASHINGTON — Congressional Republicans on Monday backed down from a demand that a payroll tax holiday be paid for with reductions in other programs, clearing the way for an extension of the tax cut for 160 million Americans through 2012.
After months of partisan confrontation that left the tax break hanging in the balance, Republicans suddenly offered to extend the 2-percentage-point cut while continuing to haggle over added unemployment benefits and a measure to prevent a drop in fees paid to doctors by Medicare. The payroll tax holiday and jobless benefits expire at month’s end, when doctors would face a 27 percent reduction in Medicare reimbursements.
The decision, announced by House Republican leaders, was a surprise after weeks of Republicans’ insistence that they would not accept extensions to any of the three benefits without offsetting the costs.
But the move underscored the desire of many Republicans — eager to blunt Democratic accusations that they do not support tax cuts for middle-class Americans — to put the tax cut fight behind them in an election year.
As the House-Senate committee charged with coming up with a plan to extend the benefits continued to negotiate, Republican leaders said they would introduce legislation this week to extend the payroll tax cut by itself, allowing the conference members to negotiate the unemployment proposal and the Medicare measure, known as the “doc fix.”
Accusing Senate Democrats and President Barack Obama of stalling negotiations, House Speaker John A. Boehner of Ohio said in a statement with Rep. Eric Cantor of Virginia, the majority leader, and Rep. Kevin McCarthy of California, the House whip, that “House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the “doc fix.” If Democrats continue to refuse to negotiate in good faith, Republicans may schedule this measure for House consideration later this week pending a conversation with our members.”
By separating the payroll tax issue from unemployment benefits, Republicans have somewhat boxed in Democrats, forcing them to decide whether to accept a stand-alone tax cut that touches nearly every working American — and is generally more popular than the additional unemployment insurance — or hold out for a package that covers all three programs, at a cost of about $160 billion. Democrats, also eager to extend unemployment pay, were reluctant to embrace the idea of resolving the payroll tax fight separately.
Rep. Chris Van Hollen of Maryland, one of the Democratic negotiators, said Monday that the payroll tax extension should “travel together” with an extension of unemployment benefits and Medicare payment legislation.