The GOP Is Beating Itself Up Over the Payroll Tax

As the clock winds down to holiday recess, portions of the GOP are in revolt over plans to extend a payroll tax cut to millions of Americans—a dispute reaching the highest rungs of the party.

For the House leadership, a major sticking point is a tax holiday for corporations allowing them to pay as little as 5.25 percent on repatriated profits. According to The Hill's Russell Berman and Bernie Becker, House Majority Leader Eric Cantor and Whip Kevin McCarthy want the repatriation provision included in a year-end deal while House Speaker John Boehner and Ways and Means chairman Dave Camp don't. Cantor thinks the inclusion of repatriation "could allow Republicans to tuck a victory into a year-end package of largely Democratic priorities" but Boehner and Camp want to wait on the provision until 2012.

And then there are the problems with the lower ranks of the party. Politico's Manu Raju and Jake Sherman report that House Republicans are "nowhere near the 218 votes needed to approve a package to extend the provisions — a failure that aides say would hurt morale in the party." Republicans such as Rep. Jeff Flake of Arizona are still pushing for ambitious (i.e. politically implausible) provisions. If "we don’t have the guts to do entitlement reform, then we shouldn’t be extending this cut,” said Flake.

In the Senate, there are disagreements on both policy and messaging. On Wednesday, Senator John McCain told reporters that "Democrats are winning" the messaging war over the payroll tax and the GOP was getting "picked apart" on the issue. "Clearly Republicans haven't gotten our cohesive plan together," he said. "We have to, one, negotiate, but second of all, have a coherent plan of all the economy, including repatriation of overseas money, including a reduction in regulations, including tax reform. We've got to get back to the big picture of our vision for America, and our belief that business creates jobs, not government creates jobs, and policies around that, rather than being picked apart on this particular issue."

On the policy side, a number of GOP lawmakers oppose the way party leaders plan to fund Social Security in the latest proposal. "Under the new GOP proposals, the Social Security trust fund will be replenished with money saved from cuts elsewhere in the federal budget," explains The Los Angeles Times' Lisa Mascaro. Senators such as Republican Roy Blunt say “It has a long-term negative impact on the Social Security trust fund. Congressman Mark Kirk went so far as to say that “members who vote for this legislation are anti-Social Security. We cannot run a retirement security program without contributions.”  We'll see if Boehner can keep his party together as he is expected reveal a new proposal to assuage GOP lawmakers at a closed-door meeting today.