Bloomberg News

Obama Says Payroll Tax Cut Blocked by ‘Faction’ in House

December 20, 2011

(Updates with Obama quotes, House vote beginning in third paragraph.)

Dec. 20 (Bloomberg) -- President Barack Obama said a two- month extension of the payroll tax cut passed by the Senate is the “only viable way” to prevent take-home pay from decreasing on Jan. 1 and a “faction” of House Republicans is holding up progress.

House Republicans rejected the Senate’s bipartisan compromise to win concessions on “extraneous issues,” Obama said in an unscheduled appearance at the White House briefing room.

Speaker John Boehner and the rest of the House Republican leadership should “put aside issues where there are fundamental disagreements and come together on something we agree on,” Obama said. “Let’s not play brinksmanship. The American people are weary of it. They’re tired of it. They expect better.”

Obama didn’t answer questions and made no mention of a call by Boehner, an Ohio Republican, for the Senate to return to Washington to negotiate.

The Republican-controlled House passed a motion to reject the compromise legislation passed by the Senate. If Congress doesn’t pass a bill before the end of the year, the payroll tax for workers is scheduled to return to 6.2 percent from the temporary rate of 4.2 percent for 2011.

In a 229-193 vote today, the House requested formal negotiations on a tax cut extension with the Senate, where Democratic leaders say they won’t discuss a yearlong agreement until the short-term deal is completed.

Damaging to Economy

Obama said failure to extend the tax cut would be damaging to the nation’s economic recovery. Allowing the tax to return to its previous rate might crimp consumer spending, which accounts for about 70 percent of the U.S. economy.

White House press secretary Jay Carney accused House Republicans of ducking a direct vote on whether to accept the Senate version. The Senate voted 89-10 on Dec. 17 in favor of the two-month extension.

“The reason they refused to vote on that bill is because it would have passed,” Carney said at a briefing just before Obama’s appearance.

--With assistance from Roger Runningen in Washington. Editors: Joe Sobczyk, Jodi Schneider

To contact the reporter on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net; Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.


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