Payroll tax divide plays out in Minnesota as well as nation's capital

  • Article by: KEVIN DIAZ , Star Tribune
  • Updated: December 22, 2011 - 9:41 AM
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Sen. Al Franken

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WASHINGTON - With the days winding down on a payroll tax holiday for 160 million Americans, leaders in Congress and its Minnesota members gave no signs Wednesday that the impasse would be broken before the New Year's deadline.

Both parties argued over who should make the next move, even as President Obama called to urge House Speaker John Boehner, R-Ohio, to pass a bipartisan Senate measure to extend the payroll tax cut for another 60 days.

The skirmish culminates a yearlong ideological battle over taxes and spending that nearly forced the government to close at least three times and cost it its top credit rating.

Minnesota's U.S. senators, both Democrats, insisted that a two-month extension passed by the Senate on Saturday with overwhelming Republican support should be backed by House Republican leaders.

"I don't think the Senate's going to be coming back," said Sen. Al Franken, who nevertheless has remained in Washington for the holidays. "We had 89 senators vote for a package Boehner signed off on. That's kind of key. Everyone knows it."

But Rep. John Kline, R-Minn., a Boehner ally, denied that Boehner had agreed to any deal on behalf of the House Republican majority. Even if he had, Kline said, "he's the speaker of the House, he's not the dictator of the House."

Kline said the House has already cleared a yearlong extension of the payroll tax cut, which provided an average savings of $1,112 for more than 3 million Minnesota families this year. With the House having also rejected the short-term Senate measure on Tuesday, Kline said, "The ball is in their court."

Also hanging in the balance is a Medicare rate cut and the extension of federal jobless programs that could end benefits for nearly 50,000 unemployed Minnesotans on Jan. 1, state officials said.

House Republicans have called for a conference committee to reach a deal before the end of the year, the normal route for resolving differences between House- and Senate-passed bills. But Senate Democrats, and some Republicans, have accused House leaders of walking away from a deal that was agreed to by the majority of Republicans in the Senate.

"The most interesting thing right now is to look at the implosion in the Republican Party with nine Republican senators now saying they should just vote on our deal," said Sen. Amy Klobuchar, who is back in Minnesota. "The point is here they need to get their act together between themselves, because who's suffering right now is the American people."

'Time to get things done'

Both parties tried to play the impasse to political advantage, from Washington to Minnesota. The National Republican Congressional Committee, the party's campaign arm in the House, has been sponsoring telephone calls this week against Rep. Collin Peterson, a rural Minnesota Democrat who voted against the House GOP bill.

Democrats have criticized the House bill as a partisan measure loaded with provisions few Democrats could support, including a freeze on federal salaries and deep spending cuts to offset an estimated $120 billion in lost revenue, which is supposed to fund the Social Security retirement program.

Only 10 House Democrats voted for the GOP bill, including Minnesota DFLer Tim Walz, a frequent Republican campaign target.

"While this bill is anything but perfect, extending tax cuts for middle-class families is too important to play politics with," Walz said. "I am sick of the political games being played in Washington. It is time to get things done."

Still, Walz sided with Democrats Tuesday in a series of largely party-line votes that set up this week's confrontation between the House and Senate.

Minnesota Republicans also went on the offensive, pressing Klobuchar to back the controversial Keystone XL oil pipeline, which Republicans have tied to support for extending the payroll tax holiday.

Klobuchar said she is taking no position on the project until a review is completed by the State Department, a process that would be expedited under both the House and Senate versions of the payroll tax extension.

Minnesota Democrats also got involved this week, with DFL Party Chair Ken Martin accusing House Republicans of blocking the bipartisan Senate compromise. "There' only one side that's digging their heels in here and saying they're not interested," he said.

Kline said Republicans remain ready to negotiate through the year's end, saying "a compromise position in the Senate is not a compromise in Congress."

Franken, however, noted that the Senate deal represented the limits of how much the Democrats were ready to give up, including a proposed surtax on income over $1 million to offset the cost of the payroll tax cut.

"You can't negotiate, have a deal, have the other side give up everything it is willing to give up, and then say, 'Oh, by the way, that's not really the deal,'" Franken said.

Klobuchar said that while she also views the House GOP as reneging on a deal, "I'm ready to go back at the drop of a hat if there's another vote."

For now that seems unlikely, although both sides have held out the possibility of Congress reaching a retroactive agreement in January.

While Congress has left town for the holidays, White House officials said Obama is delaying a planned Hawaii vacation in case the House decides to act this week on the Senate measure. "The compromise exists," said White House spokesman Jay Carney. "It's available even now for the House to vote on."

Kevin Diaz is a correspondent in the Star Tribune Washington Bureau.

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