US & Canada

House Republicans want changes to payroll tax deal

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Media captionHouse of Representatives Speaker John Boehner says he hopes there will be 'no more kicking the can down the road'

US House Republican leaders have said they will reject a bipartisan package on a short-term tax break for workers, in Congress' latest budget stand-off.

With a House of Representatives vote due, Speaker John Boehner said he wanted the payroll tax holiday renewed for a whole year - not just two months.

The Senate bill passed with bipartisan support on Saturday, but then rank-and-file Republicans united against it.

The White House said Mr Boehner had been swayed by a "Tea Party revolt".

If Congress cannot reach a deal by the end of this month, the payroll tax rate will rise by 2% in the new year, which analysts warn could hurt a fragile economic recovery.

The package, supported by President Barack Obama, would also extend benefits for the long-term unemployed and avert deep cuts to doctors' Medicare fees.

Public confidence in Congress has hit historic lows after a series of bitter and last-minute fights between Democrats and Republicans over spending and taxes.

'Short-term fixes'

After a two-hour meeting of the House Republican conference committee on Monday evening, Mr Boehner and other Republicans reiterated they would reject the Senate bill, and postponed the vote to Tuesday.

House Republicans said that after the vote, they would then request negotiations with the Senate.

"Americans are tired of Washington's short-term fixes and gimmicks," Mr Boehner said earlier on Monday. "We oppose the Senate bill because doing a two-month extension instead of a full-year extension causes uncertainty for job creators."

Mr Boehner said Democrats should be willing to work until a deal had been reached

Democrats accused Mr Boehner of reneging on a deal brokered by Senate Republican leader Mitch McConnell and his Democratic counterpart Harry Reid.

Image caption The Keystone XL pipeline is opposed by many environmentalists

Mr Reid said on Monday: "I negotiated a compromise at Speaker Boehner's request. I will not reopen negotiations until the House follows through and passes this agreement that was negotiated by Republican leaders and supported by 90% of the Senate."

When asked if Mr McConnell had produced a "bad bill", Mr Boehner did not directly criticise his counterpart.

"The Senate did their job. They produced a bill," he said. "And the House disagrees with it."

Senator Scott Brown of Massachusetts, a Republican facing a tough battle for re-election next year, was one of the 39 members of his party that voted for the Senate bill.

"The House Republicans' plan to scuttle the deal to help middle-class families is irresponsible and wrong," Mr Brown said in a statement.

Year-end deadline

The main disagreement is how to offset the cost of extending the tax break for an estimated 160 million American workers.

House Republicans said on Sunday they wanted to see tougher spending cuts in the legislation.

If no deal is struck by 31 December, annual taxes would go up by about $1,000 (£643) for the average worker.

Correspondents say that since Republicans only reluctantly agreed to the payroll tax extension in the first place, voters could blame them for any impasse.

With an election year looming, Democrats would renew their argument that Republicans only favour tax cuts for the wealthy.

The new stand-off on the payroll tax issue arose just as it appeared that Republicans had outflanked President Obama by inserting a provision that would force him to make a decision early next year on a controversial pipeline.

The White House last month delayed until after next year's elections saying whether or not it would approve the Keystone XL project, amid strong objections from environmental groups and the US state of Nebraska.

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