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House Republicans Cave on Payroll Tax Cuts

ABC News(WASHINGTON) -- House Republican leaders have decided to accept a short-term extension of the payroll tax cut, sources told ABC News on Thursday, preventing a hike in taxes just nine days before the tax break expires for 160 million Americans.

House GOP leaders appeared to be adopting a compromise suggested by Senate Minority Leader Mitch McConnell to pass the two-month extension in exchange for the Senate appointing members to a conference committee, which will negotiate a longer-term solution. The proposal won a nod of approval from President Obama and Senate Majority Leader Harry Reid.

House Republican leaders are expected to present this proposal to their members in a 5 p.m. conference call.

The bill could be passed, potentially, by unanimous consent, which would not require the full House to return to a vote.

Obama on Thursday assailed House Republicans for a "ridiculous Washington standoff" and stepped up pressure on them to pass a two-month extension bill that sailed through the Senate by a bipartisan vote. The president, who delayed his vacation to Hawaii with his family because of the stalemate, was surrounded by individuals who wrote to the White House detailing how the end of the payroll tax break would affect their lives.

House Republicans faced increasing pressure, even from their Senate counterparts, to find a compromise quickly. Outwardly, the House GOP leadership showed no outward sign of caving in, reiterating defiantly that they would not support the Senate bill.

"The fact is, we can do better," Speaker John Boehner, R-Ohio, said in a news conference. "It's time for us to sit down and have a serious negotiation and solve this problem."

But internally, even rank and file House Republicans were beginning to break away from House Speaker John Boehner and the GOP leadership's insistence that Congress approve a year-long deal to extend the payroll tax cut, instead urging the speaker to consider a short-term deal.

All week long, conservatives ranging from Sen. John McCain, R-Ariz., to Karl Rove took shots at Boehner and the House GOP for holding out for a long-term extension.

Senior Democrats on Thursday pounced on Republicans for not agreeing to the two-month extension.

"Republicans have been arguing about process and politics," House Minority Whip Steny Hoyer said. "The stakes are too high to be arguing about politics and process. The Republican contention that the two-month compromise somehow is unworkable is simply untrue."

If members of Congress couldn't come together on a deal by the end of next week, 160 million American workers would have seen a 2 percentage point increase in their taxes, starting Jan. 1, raising the overall tax burden to 6.2 percent. Three million people who are receiving long-term unemployment benefits would also see their benefits drop. The gridlock also impacts Medicare, which will likely lower its reimbursements to doctors.

The payroll tax cuts, passed by George W. Bush's administrations are popular on both sides of the political aisle. Washington experienced a similar gridlock in 2010 when the time came to renew the cuts.

Conservatives have lashed out at House Republicans for creating a "fiasco" that puts the party in a negative light and virtually hands over the win to Obama and Democrats.

Copyright 2011 ABC News Radio

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