CQ TODAY ONLINE NEWS – TAXES
Updated Dec. 20, 2011 – 5:36 p.m.

House Votes Leave Tax Cut, Jobless Benefits, Doctor Payments in Limbo

House Votes Leave Tax Cut, Jobless Benefits, Doctor Payments in Limbo

At a Tuesday afternoon news conference, Boehner called on Obama to help end the standoff by calling the Senate back into session to open a conference committee with the House. “I need the president to help out,” Boehner said.

Obama made a surprise appearance in the White House briefing room moments earlier and called on Boehner to allow an up-or-down vote on the bipartisan Senate measure, saying passage of the two-month extension is the only way to avoid increasing payroll taxes on workers in 11 days. “Let’s not play brinkmanship. The American people are weary of it. They’re tired of it,” he said.

Retroactive Fix?

Given the gulf between Reid and House GOP leaders, expiration of the payroll tax cut and long-term jobless benefits — once viewed as improbable given the weakness of the economy and the political stakes involved — now appears a distinct possibility.

It is unclear exactly what will happen after the House votes Tuesday. House lawmakers might follow senators out of town, but there will be pressure on them to stay and several Republicans interviewed Monday said they had no plans of leaving.

Should the payroll tax cut and other programs expire on schedule, it is possible lawmakers might try to renew them retroactively in January.

Compared with this year, workers would have more money withheld from their initial paychecks, as their payroll tax rate would jump from 4.2 percent to 6.2 percent. But a retroactive payroll tax cut is still feasible, according to experts.

“Virtually all payroll systems are built to self-correct Social Security taxes, so employers would automatically accommodate a late but retroactive change, automatically refunding to each employee any over-withholding from early 2012 payrolls,” Pete Isberg, president of the National Payroll Reporting Consortium, wrote in a letter to House and Senate lawmakers Monday.

Absent congressional action, Medicare payments to doctors will be cut 27 percent in 2012.

But Congress has been down this road before. In 2010, the so-called Medicare “doc fix” expired more than once but Congress always fixed it retroactively, so no doctors ever saw the cuts.

The Centers for Medicare and Medicaid Services (CMS) can hold physicians’ claim forms for a few weeks while waiting to see if Congress acts. Once Congress makes a retroactive fix, CMS can process all the claims with the new reimbursement rate.

Also in 2010, long-term jobless benefits expired for more than a month but were eventually renewed retroactively. The benefits, good for up to 99 weeks in states with high unemployment, expired June 2 and were continued in legislation (PL 111-205) that Obama signed into law on July 22.

Political Maneuvers

House Votes Leave Tax Cut, Jobless Benefits, Doctor Payments in Limbo

Putting aside questions about next year, lawmakers appear to be firmly focused on the current impasse.

At a House GOP conference meeting Monday evening, few people argued in favor of accepting a two-month Senate bill, according to several lawmakers.

“No,” freshman Arizona Rep. Paul Gosar said when asked if anyone supported the bill. “Two months? You got to be kidding me.”

Florida’s C.W. Bill Young said that while all Republicans are pushing for a full-year bill, “one or two” suggested the GOP should wait until next year and push for the full-year extension then.

“A very small number” made that case, Young said. “Most everybody said regardless of how we do it, regardless of how we get to it, we’ve got to stand for the full-year extension.”

“This is about as united as I’ve seen us all year long,” Texas Rep. Louie Gohmert said.

In general, House Republicans argue that the Senate agreement exemplifies what the public dislikes about Congress — namely its inability to arrive at long-term solutions to problems and its too-clever compromises.

“I’ve seen Congress kick the can down the road, kick the can down the road — it’s time to stop the nonsense,” Boehner said Monday. “We can resolve these differences and we can do it in a way that provides certainty for job creators and others in our economy.”

But House and Senate Democrats, and even a few Senate Republicans, have said House Republicans would be held responsible for failing to accept the one bipartisan bill that would extend current benefits.

“It angers me that House Republicans would rather continue playing politics than find solutions,” said Sen. Scott P. Brown, R-Mass., in a written statement issued after the House vote to go to conference. “Their actions will hurt American families and be detrimental to our fragile economy.”

Though angry at the House for not voting on the Senate measure, some Democrats viewed Boehner’s decision as a sign of weakness and held out hope it would eventually be reversed.

“It’s clear Speaker Boehner is afraid to give the Senate’s bipartisan compromise an up-or-down vote because he worries it would pass,” Charles E. Schumer of New York, the Senate’s No. 3 Democrat, said in a written statement. “As more and more Republicans denounce the Speaker’s actions, his stalling will prove politically unsustainable.”

Richard E. Cohen, Paul M. Krawzak, Emily Ethridge and David Harrison contributed to this story.