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Payroll Tax Fight Leads Congressional Republicans To Turn To Offensive Strategies

Payroll Tax Bill

By ALAN FRAM   02/18/12 09:29 AM ET  AP

WASHINGTON -- Bruised from the payroll tax cut brawl, congressional Republicans want to change the subject and push legislation they say would create jobs by promoting transportation and energy projects, cutting business taxes and helping companies raise capital.

Democrats hope to use the momentum they say they gained from the payroll fight by forcing Republicans to vote repeatedly this election year on jobs programs financed by tax boosts on the rich.

The parties' legislative strategies underscore the political conclusions each drew from the payroll battle. That fight finally ended Friday when Congress used bipartisan votes to send President Barack Obama a $143 billion package extending the 2 percentage point payroll tax cut, preserving extra jobless benefits for the long-term unemployed and preventing slashes in Medicare reimbursements to doctors.

Until abruptly dropping their demand that the payroll tax cut be financed with spending cuts, outmaneuvered Republicans had let Democrats cast them as opposing a middle-class tax break for 160 million workers. That was a vulnerable position just months ahead of presidential and congressional elections, so the GOP is trying to refocus voters on what they say are Obama's failed efforts to fully revive the economy.

"We need to change course and focus on pro-growth economic policies that help small businesses create jobs," House Speaker John Boehner, R-Ohio, said Friday after House passage of the payroll tax measure.

With jobs as their overriding theme, House Republicans want to push their $260 billion, 4 1/2-year transportation bill through the chamber sometime after next week's congressional recess. It is coupled with legislation expanding oil and gas drilling off the nation's coasts.

Both those measures are in trouble, and the drilling legislation has no chance of passing the Democratic-run Senate or getting Obama's signature. But the GOP relishes the way it will let them contrast Obama's "anti-energy policies with the pro-energy, pro-American jobs policies of Republicans," according to Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee.

Also in the GOP's playbook for this year is:

_A 20 percent tax deduction pushed by House Majority Leader Eric Cantor, R-Va., that would cover businesses with fewer than 500 employees – effectively cutting taxes for 99 percent of the country's 27 million firms.

_A budget for the upcoming federal fiscal year in which House Budget Committee Chairman Paul Ryan, R-Wis., will again propose dramatically revamping the hugely expensive Medicare program, always a risky proposition in an election year. This time, he might follow a plan he introduced with Sen. Ron Wyden, D-Ore., which would let current Medicare recipients stay with the current program.

_A continued push for the proposed Keystone XL pipeline, which would carry oil from Canada to Texas. The Obama administration has postponed approval of the project out of environmental concerns, but Republicans are pressing it anyway, saying it will produce many jobs.

_Measures that would remove regulatory obstacles to companies that want to raise money and undo other federal rules that the GOP argues cost jobs.

Democrats say the payroll fight showed they have figured out how to use the tax issue, long the GOP's domain, to their advantage by pushing tax cuts that are politically awkward to oppose.

As evidence, they cite polls like an ABC News-Washington Post survey this month showing that 72 percent of the public supports boosting taxes on people earning over $1 million annually.

Democrats also note the divisions the payroll tax votes caused Republicans. House GOP lawmakers voted strongly for the package but Senate Republicans leaned against it by a 2-1 margin. Even tea party-backed senators were divided, with Sen. Marco Rubio, R-Fla., voting yes but Sen. Pat Toomey, R-Pa., opposed.

Democrats' list of bills for the year includes proposals like Obama's to boost job training and domestic manufacturing and provide tax incentives for companies that return jobs from abroad to the U.S. – paid for by raising taxes on the wealthiest Americans.

Such bills are likely to go nowhere, even in the Senate. But they could achieve Democrats' political purposes by forcing Republicans to take difficult votes.

Sen. Charles Schumer of New York, a member of the Senate Democratic leadership, said Republicans were forced to accept the extended payroll tax cut "given its popularity and the power of the president's bully pulpit. We will be seeking to replicate this dynamic with other jobs measures in the months to come."

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Filed by Paige Lavender  |