House Republicans propose separating payroll tax extension from 'doc fix,' unemployment debate

But some rank-and-file GOP House members are cool to the proposal to extend the lower tax cut without offsetting spending cuts.

The New York Times: House Republicans Yield On Extending Payroll Tax Cut
Congressional Republicans backed down on Monday from a demand that a payroll tax rollback be paid for with reductions in other programs, clearing the way for an extension of the tax cut for 160 million Americans through 2012. After months of partisan confrontation that left the tax break hanging in the balance, Republicans suddenly offered to extend the two-percentage-point cut while continuing to haggle over added unemployment benefits and a measure to prevent a drop in fees paid to doctors by Medicare. The payroll tax holiday and jobless benefits expire at month's end, and doctors would face a 27 percent reduction in Medicare reimbursements (Steinhauer, 2/13).

The Chicago Tribune: House Republican Leaders Agree To Extend Payroll Tax Cut
Democratic leaders, including (House Democratic leader Nancy) Pelosi, were cool to the overture, largely because it failed to resolve two other issues that have been part of the $160-billion package along with the payroll tax cut -; measures to continue long-term unemployment benefits and block a pay cut for doctors who treat Medicare patients. At the White House, Press Secretary Jay Carney said, "We need to do all three" (Mascaro, 2/13).

The Washington Post: House Republican Leaders Agree To Payroll Tax Holiday Extension Without Offsets
Republicans want to continue negotiations over financing the rest of the original legislative package, including an extension of un­employment benefits and a key tweak to maintain Medicare reimbursement rates for doctors, while ensuring that taxes will not rise on workers (Kane, 2/13).

The Wall Street Journal: GOP Pivots On Payroll-Tax Cut
In addition to the payroll-tax reduction, the two parties are negotiating how to pay for enhanced unemployment benefits, an arrangement that expires at the end of the month, and an adjustment of the Medicare system so that doctors don't face a steep drop in fees. Republicans want to cover the $50 billion cost for those items by continuing a freeze of federal workers' salaries, while Democrats resist that approach (Bendavid, 2/13).

Politico: House GOP Reverses On Payroll Tax cut
The announcement shocked rank-and-file members, who were back in their House districts. Senate Republicans were likewise caught off guard -; even one GOP leader who was trying to negotiate a compromise had no idea it was coming. And conservative ire rose throughout the day, threatening to derail Speaker John Boehner's plan to take the thorny issue off the table. "We need to stop bowing to political pressure and do the right thing and make sure we don't bankrupt Social Security even further," Sen. Ron Johnson of Wisconsin told POLITICO. Added Missouri Sen. Roy Blunt, a former House GOP leader: "I think the whole policy is a bad policy" (Raju and Sherman, 2/13).

Reuters: Republicans Drop Demand To Pay For Payroll Tax Cut
The Democratic-led Senate would likely support the payroll tax extension as laid out by the Republicans, even though they prefer including in the deal provisions on jobless benefits and payments for doctors treating Medicare patients that Republicans now want to negotiate separately (Smith and Ferraro, 2/13).

Modern Healthcare: No Remedy For Docs In GOP's Payroll Tax-Cut Plan
House Republican leaders announced they will introduce a bill to extend a middle-class payroll tax holiday in legislation that won't include a solution to Medicare's sustainable growth-rate formula for physicians. Beginning March 1, physicians who participate in the Medicare program will face a 27.4% cut in reimbursement if Congress does not address the issue by Feb. 29 (Zigmond, 2/13).