Payroll Tax Cut: House Rejection Pins Hope on Conference Committee

The House of Representatives on Tuesday rejected a two-month extension of the payroll tax cut passed by the Senate on Saturday, calling for a conference committee to find a middle ground between the two houses of Congress.

The vote, with a final 229-193 tally, sends the bill back to the Senate, where it passed by an 89-10 margin, in an effort to negotiate a deal in-conference. But Senate Democrats have left for the year and have stated they will not return to the Capitol, putting any plans of reconciling differences in jeopardy.

The rejected bill left members of each house, and within the Republican party, divvying blame amongst themselves, with Senate Democrats lambasting House Republicans for rejecting a bill with broad bipartisan support.

Right now Americans want two things from their Congress: middle class tax relief and compromise, said Rep. Steve Israel, D-N.Y. House Republican partisanship failed on both counts.

House Republicans charged their counterparts kicked the can down the road instead of staying in town to iron out a deal.

If you say you want to do this for a year, put your vote where your rhetoric is, said Rep. Jeb Hensarling, R-Texas. If you're not willing to work over the holidays, admit to the American people that you're not willing to work over the holidays.

The Senate bill extended the current 2 percent tax cut, as well as unemployment benefits and a buffer against a drop in Medicare payments to doctors. The $33 billion plan would have been paid for by a hike in charges for loan guarantees by Fannie Mae and Freddie Mac. Should Dec. 31 go by without a new deal, the payroll tax will revert to its 6.2 percent rate, and many will be tossed off of unemployment benefits.

The inclusion of riders meant to entice GOP lawmakers, namely the Keystone XL pipeline's hurried approval, was not enough to draw support from Republicans, who deemed the two-month stopgap provision inadequate.

After Tea Party Opposition, Boehner Reverses

Early indications showed House Speaker John Boehner, R-Ohio, would support the measure, but reports claimed members of his caucus, specifically the far-right Tea Party group, lambasted the deal. Senate negotiations led to the removal of provisions to change the unemployment system, as well as dropped funding for President Barack Obama's healthcare law, which blocked Senate Democrat approval of the deal. House Republicans demanded those provisions return and the bill last a full year rather than two months.

The call to conference struck at a desperation to iron out a lasting deal, rather than have a election-year debate over a tax cut largely unpopular with Republican lawmakers.

We need to come together in a responsible manner to find common ground where we can accomplish everyone's goal of a year-long payroll tax extension, said Rep. Eric Cantor, R-Va. during a floor debate. Mr. Speaker, there is no reason why the House, the Senate and the president cannot spend next two weeks working to get that done. America will be waiting.

Boehner expressed hope that a deal could be ironed out ahead of the Dec. 31 deadline.

I don't believe the differences are that significant that we can't do this for a whole year, Boehner said. Why punt this until the end of February when we can just do this now and get it over with?