House Republicans Pushed Two-Month Payroll Tax Holiday In January 2009

House Republicans Pushed Two-Month Payroll Tax Holiday In January 2009

WASHINGTON -- House Republicans will likely reject a two-month extension of the payroll tax holiday Monday evening, citing a desire to avoid striking a short-term deal and the uncertain impact such a deal would have on a fragile economy.

Just under two years ago, House Republicans, including some of the party's more conservative members, were arguing that a two-month payroll tax holiday would "effectively stimulate" the economy.

How we got from point A to point B is a reflection of the reversal that has occurred, in a short period of time, in the political dynamics of economic recovery.

The January 2009 bill sponsored by Rep. Louie Gohmert (R-Texas) and backed by 56 House Republicans, including current presidential candidate Rep. Michele Bachmann (R-Minn.), is not identical to the one that is currently being considered. It called for a complete payroll tax holiday, meaning the tax rate would be reduced to zero. The current version, meanwhile, would keep the rate at 4.2 percent, rather than allow it to return to the pre-2010 level of 6.2 percent. The two bills also advocated paying for the tax cut in different ways. Gohmert wanted to use leftover TARP funds. The Senate, meanwhile, voted on Saturday to hike fees on mortgage giants Fannie Mae and Freddie Mac in order to cover the tab.

The political postures of Republican lawmakers have also changed. Today's House GOP argues that a two-month holiday is a hard-to-implement Democratic ploy to put them in a compromising political position. The 2009 class saw actual economic benefits to keeping the payroll tax rates low -- or, for a two-month time period, to eliminating them in their entirety.

"As you probably know, last month I proposed a two-month federal tax holiday that would serve as an alternative to the remainder of the bailout and more effectively stimulate our economy," Gohmert said on January 6, 2009. "My bill would put the money back in the hands of the taxpayers who earned it by temporarily suspending individual income and FICA taxes for 2 months - meaning no taxes would be paid on those two months' income."

"Today I’ve reintroduced my two month tax holiday bill in the new Congress and updated the proposal to go into effect the first whole month following the bill’s passage," Gohmert continued. "Therefore, as soon as this Congress’ Leadership allows a vote on the bill and it is signed into law, you will be able to hang on to more of your money, and we’ll see the American economy stimulated while keeping our strong democratic, free-market principles intact."

It would be tough to find House Republicans willing to say those words Monday evening. Such an argument would more likely be made by members of Democratic leadership, an administration official, or certain Senate Republicans. The Huffington Post emailed and called Gohmert's office for comment but did not receive a reply.

On Monday, White House Communications Director Dan Pfieffer argued that House Republican leadership could whip the roughly 40 to 45 votes needed to get a two-month extension of the payroll tax holiday through the chamber. He was rebuffed.

"Why would we ask members to do something that is bad policy that we do not agree with?" said one top GOP leadership aide. "Why settle for bad legislation when there is an alternative? The stated goal for the president, for Harry Reid and for House Republicans is a year-long extension. There is no excuse to be on vacation for 2 weeks until we exhaust every option to achieve that goal."

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