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Payroll Tax Holiday, Jobless Benefits Hang in the Balance

House Republicans will conference Thursday to figure out how to pass a handful of expiring measures, including jobless benefits and an extension of the president’s payroll tax cut, before the end of the year.

The GOP Conference last week rejected a proposal floated by Speaker John Boehner (R-Ohio), and leadership has spent this week trying to figure out the right combination of items to include in a package that can garner 218 votes on the floor.

Democrats, meanwhile, have hammered the GOP this week on extending the payroll tax cut and unemployment insurance, given that Republican leaders in both chambers have struggled to convince their rank and file that extending the popular tax holiday is politically necessary.

President Barack Obama tried to pre-empt Republicans today when he said he would reject any package to extend the payroll tax break that attached “extraneous” provisions, including approval of a controversial oil pipeline between Canada and the United States. House Republicans have said they might tie the Keystone XL oil pipeline project to the payroll tax in an effort to attract more GOP support.

“If the payroll tax cut is attached to a whole bunch of extraneous issues not related to making sure that Americans’ taxes don’t go up on Jan. 1, it’s not something I would accept,” Obama said in a media appearance with Canadian Prime Minister Stephen Harper.

Obama specifically noted he would reject “any effort to tie Keystone to the payroll tax cut,” adding that “everybody can be on notice.”

Besides the pipeline issue, House Republicans have been discussing the inclusion of several unrelated provisions to the year-end bill, including one aimed at reducing Clean Air Act regulations for boilers.

Some GOP leaders, particularly Majority Leader Eric Cantor (Va.), have suggested including legislation that would grant companies a tax holiday on overseas profits. The idea known as repatriation has a broad spectrum of supporters including Cantor, members of the Blue Dog Coalition and Senate Democratic Conference Vice Chairman Charles Schumer (N.Y.). More than 50 GOP freshmen also sent a letter to House leaders Monday calling on them to include repatriation in the year-end payroll tax package.

A GOP aide acknowledged leaders are shuffling through a lot of moving parts.

“We are working with our Members to find a path forward to ensure taxes aren’t increased on anyone and find resolution on the other end-of-the-year items in a package that can garner 218 votes for passage,” the aide said. “Whether it be repatriation that was included in our jobs plan and has bipartisan support, or another item, the goal is to find support among our Members.”

It’s unclear whether repatriation will be included in the final package, because some Republicans, including Boehner and Ways and Means Chairman Dave Camp (Mich.), want to incorporate it into a broader tax reform deal that could be brought up next year. Senate Majority Leader Harry Reid (D-Nev.) also opposes it.

Regardless of what sweeteners are ultimately included to win over votes, the general consensus across the Capitol is that many of the expiring provisions, excluding tax extenders that can be retroactively applied, will be bundled into one large bill and sent from the House to the Senate.

Though the Senate has been holding dueling partisan votes on the payroll tax holiday extension, Congress is unlikely to move each provision separately, given the complicated politics of each issue and an ever-shrinking calendar.

“It will be impossible to do this piecemeal, and if anybody has the notion in the House that they can toss a bill at us and leave town, they’re sadly mistaken,” Senate Majority Whip Dick Durbin (D-Ill.) said today. “What we’ve got to do is get down to business — it’s payroll tax cut, it’s [unemployment insurance], it’s making certain we have a spending bill moving forward at this point.”

It’s also unlikely that a bill would go from the Senate to the House, though some aides suggested Democrats might try. But it would be difficult for Senate Democrats to overcome a filibuster on any package that would likely die in the House.

Cantor warned Members today that they should be flexible with their schedules next weekend and prepare to be in town.

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