GOP Offers to Extend Payroll Cut

Congressional Republicans drop demand that payroll tax cut be offset with spending reductions.

Congressional Republicans offered to drop their demand to finance a 10-month payroll tax cut extension with spending reductions and said the House may vote on the plan this week if they don’t reach a broader agreement with Democrats.

The Republican proposal, which would add $94 billion to the deficit, reflects the desire to avoid being blamed for an impasse, as when a breakdown in talks almost caused the tax break to expire at the end of December, said a Republican leadership aide who spoke on condition of anonymity. Democrats propose an income surtax on people earning more than $1 million a year. The Republican proposal is an attempt to defuse the tax issue, the Republican aide said.

House Republican leaders said in a statement they may put the payroll-tax cut proposal on the House floor for a vote later this week.

“Today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year” while negotiations continue on other provisions, House Speaker John Boehner of Ohio, Majority Leader Eric Cantor of Virginia and Majority Whip Kevin McCarthy of California said in a joint statement.

Congress agreed to a two-month extension of the payroll tax cut for workers, which expires Feb. 29, to give them more time to negotiate on how to continue the tax cut through the rest of 2012.

Senate Majority Leader Harry Reid said he is reviewing Republicans’ proposal. The Nevada Democrat said in an interview that his office received the Republican proposal “a few minutes ago” and that it moved negotiations closer to an agreement.

 

Bloomberg News

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