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GOP Leaders Hope For Agreement On Payroll Tax Cut

Alex Wong/Getty Images

WASHINGTON (AP) — House Speaker John Boehner said Thursday he’s confident that congressional Republicans are ready to move ahead with legislation that would continue a payroll tax cut.

“I feel confident in our ability to move ahead,” the Ohio Republican told reporters after GOP leaders previewed legislation to extend the Social Security payroll tax cuts — and long-term unemployment benefits as well — in a meeting of the rank and file Thursday morning. He said the party would aim for a vote next week.

One official who attended the closed-door meeting said lawmakers responded particularly favorably to a provision that would assure construction of an oil pipeline from Canada to Texas, despite a veto threat from President Barack Obama.

The measure has been in the drafting stage for more than a week, as Boehner and other leaders sought to coax lawmakers to support a payroll tax cut extension. Critics of that legislation have said they don’t believe payroll tax relief helps create jobs.

In addition to extending the Social Security payroll tax cut and benefits for the long-term unemployed, the measure has been broadened to avert a threatened 27 percent cut in payments to doctors who treat Medicare patients. All three items carry a Dec. 31 deadline for action.

The House measure varies on several points from legislation that Obama and congressional Democrats want, but the president seemed eager on Wednesday to draw a line at items he described as extraneous His veto threat was specifically linked to any requirement for the construction of the Keystone XL oil pipeline, a project that he recently put on hold until after the 2012 election.

“Efforts to tie a whole bunch of other issues to what’s something that they should be doing anyway will be rejected by me,” he said.

Obama did not say which other items he had in mind.

Republicans said they welcomed a fight over the pipeline, which they have described as shovel-ready and promising 20,000 new jobs at a time of high unemployment.

“We are working on a bill to stop a tax hike, protect Social Security, reform unemployment insurance and create jobs,” said Michael Steel, spokesman for House Speaker John Boehner, R-Ohio. “If President Obama threatens to veto it over a provision that creates American jobs, that’s a fight we’re ready to have.”

Obama would lower the 6.2 percent payroll tax that workers normally pay to 3.1 percent next year, part of his effort to breathe life into the country’s ailing job market. He also wants to trim the payroll taxes that employers pay to give them an incentive to hire people.

The House bill would drop next year’s payroll tax to 4.2 percent, the same as this year’s level, with no tax breaks for companies. It would be financed by extending the current pay freeze on federal workers through 2015 and a host of smaller savings, including charging higher Medicare premiums to higher-earning seniors.

A 2 percentage point reduction in the payroll tax means a tax cut of $1,000 to an earner making $50,000 a year.

A similar battle is brewing in the Democratic-run Senate, where leaders plan a symbolic vote as early as Thursday that is designed for political purposes.

That Democratic-written bill would lower next year’s payroll tax to 3.1 percent. It is financed chiefly by a 1.9 percent surtax on income over $1 million, a proposal that is almost universally opposed by Republicans, who say it would discourage business owners from hiring.

GOP senators are expected to easily kill the measure, but Democrats hope the roll call will produce fodder for campaign ads against Republicans.

Asked Wednesday by reporters whether he might eventually accept spending cuts to pay for the bill, Reid showed some flexibility.

“We’re ruling nothing out, OK?” Reid said, other than budget cuts to federal agencies, which have already been sliced twice this year.

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