House GOP Passes Payroll Tax Cut Bill Obama Has Threatened To Veto

December 13, 2011 1:53 p.m.

Despite loud warnings from Senate Democrats and a veto threat from President Obama because of poison pills within the text, House Republicans Tuesday passed legislation to renew a 2 percent payroll tax holiday and extended unemployment benefits of one more year.

The bill passed 234 – 193, with 10 Democrats joining with the Republicans and 14 Republicans pitching in with the Dems.In a private conversation Monday, Senate Majority Leader Harry Reid again warned House Speaker John Boehner that his bill remains dead on arrival in the Senate. In particular, Democrats and the White House oppose a number of GOP-backed provisions: a measure forcing the Obama administration to expedite its decision about whether to green light construction the Keystone XL pipeline; out-year spending caps that could further reduce funding to key federal programs; and other restrictions including one that would allow states to drug test unemployment applicants.

The GOP bill also includes a steep increase in Medicare costs for middle class and upper class beneficiaries to help offset the cost of the payroll holiday. Per the Associated Press, it would “rais[e] premiums for ‘high-income’ Medicare beneficiaries, now defined as those making $85,000 and above for individuals, or $170,000 for families.”

Some would pay as much as several hundred dollars a month additional for Medicare outpatient and prescription coverage. Millions who don’t consider themselves wealthy would also end up paying more.

Just the top 5 percent of Medicare recipients currently pay higher premiums, a change that took effect a few years ago. The new GOP proposal would expand that over time to include the highest-earning one-fourth of seniors.

The White House issued an official veto threat Tuesday afternoon. But Republicans are insisting on going through the motions.

“[F]irst, we need to see if the House bill…can pass the Senate,” Senate Minority Leader Mitch McConnell told reporters at a Capitol press briefing Tuesday. “I hope it will. I know there are a number of Democrats, including at least five, that I can count up — can count who are in the path of the pipeline, plus others who’ve said this is important.”

Republicans were hoping to hand this legislation off to Senate Dems as a take it or leave it proposition. But Senate Dems foiled that plan by implicitly linking the payroll holiday bill to separate legislation to fund the government. Current funding runs out at the end of the week and Dems are essentially warning House Republicans that if they try to skip town now they’ll be responsible for a government shutdown.

House Minority Whip Steny Hoyer told reporters Tuesday he believes this will force Republicans — and Democrats for that matter — to break the remaining impasses in the next several days. “Once [the House payroll bill] passes or fails, hopefully that will focus the mind with 72 hours left before the government…runs out of authority to operate,” he said.

Democrats continue to push Republicans to accept a small income surtax on income over $1 million to offset the cost of renewing the payroll holiday, but with little time until the government shuts down and the current tax cut expires, they may be willing to cut a deal.

Said Sen. Dick Durbin (D-IL), the number two Democrat in the Senate, “We’re open to ideas.”

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