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Obama blames stalemate over payroll tax on GOP

Continuing a tax cut of up to $40 a week for workers and unemployment benefits for millions of jobless Americans hit a wall Tuesday as the House rejected a two-month extension of both, and President Obama blamed Republicans for the stalemate.

"The clock is ticking, time is running out," Obama said shortly after the House voted, 229-193, to request negotiations with the Senate on renewing the payroll tax cuts for a year and rejecting the call for just a two-month extension.

House Speaker John A. Boehner, R-Ohio, told that Obama had sought his help, replied, "I need the president to help out." His voice rose as he said it, and his words were cheered by dozens of Republicans lawmakers who have pushed him and the rest of the leadership to pursue a more confrontational strategy with Democrats and the White House in a contentious year of divided government.

This time, it wasn't a partial government shutdown or even an unprecedented Treasury default that was at stake, but the prospect that payroll taxes would rise Jan. 1 for 160 million workers and long-term unemployment benefits end for millions of jobless victims of the worst recession since the 1930s.

Yet another deadline has been entangled in the dispute, this one affecting senior citizens, but the Obama administration announced that it had finessed a way around it. Officials said paperwork for doctors who treat Medicare patients in the early days of the new year will not be processed until Jan. 18, giving lawmakers more time to avert a 27 percent cut in fees threatened for Jan. 1.

Whatever the stakes, there was little indication that Republicans would get their wish for negotiations with the Senate any time soon. Senate Majority Leader Harry Reid, D-Nev., issued a statement saying he would be happy to resume talks on a yearlong measure -- "but not before" the House ratifies the two-month bill and sends it to Obama for his signature.

Given Obama's remarks and Reid's refusal to negotiate, it was unclear what leverage Republicans had in the year-end standoff. It appeared likely the disagreement could easily persist past Christmas and into the last week of the year.

The standoff was sowing confusion in business, running out of days to adapt to any new payroll tax regimen. Even the Senate's proposed two-month extension was creating headaches because it contained a two-tiered system geared to ensuring that higher-income earners paid a higher rate on some of their wages, according to a trade group.

"There's not time enough to do that in an orderly fashion," said Pete A. Isberg, president of the National Payroll Reporting Consortium trade group. "We're two weeks away from 2012." He wrote a letter to congressional leaders this week warning that the Senate bill "could create substantial problems, confusion and costs."

In his appearance before White House reporters, Obama said Republicans would be to blame for the consequences of a deadlock. "Right now, the recovery is fragile, but it is moving in the right direction," he said. "Our failure to do this could have effects not just on families, but on the economy as a whole." Obama requested the extension of the payroll tax cut and unemployment benefits in the fall as part of his jobs program.

The next step in the legislative process usually involves House and Senate leaders naming negotiators, or conferees, to work out differences and craft compromise legislation that would need each chamber's approval. But it's unclear when or even whether such a negotiation will occur.

The Senate adjourned thinking that the House would go along with its compromise, and Reid has balked at appointing negotiators.

"I have been trying to negotiate a yearlong extension with Republicans for weeks, and I am happy to continue doing so as soon as the House of Representatives passes the bipartisan compromise to protect middle-class families, but not before then," he said Tuesday.

Boehner named House conferees, including Rep. Tom Reed, R-Corning.

"I am honored to be named as one of the House negotiators," said Reed, who serves on the tax-writing Ways and Means Committee. "I am ready and waiting to get to work on a long-term solution for hardworking taxpayers."

Even if the two sides meet, they face tight deadlines. Rep. Steven LaTourette, R-Ohio, figured that negotiators have two weeks to get a deal. Since Jan. 1 and 2 are federal holidays, lawmakers would have until midnight Jan. 2 to work something out, he said.

Senate Minority Leader Mitch McConnell, R-Ky., left a meeting with House leaders Friday believing that Boehner and his top deputy, House Majority Leader Eric Cantor of Virginia, would find the votes to approve a two-month extension of the tax holiday. Boehner and Cantor have since disavowed giving McConnell the go-ahead to make the deal.

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