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House GOP Will Offer Straight Extension of Payroll Tax Cut

Republicans on the payroll tax cut conference committee have offered to drop their insistence that a payroll tax holiday be offset with spending cuts elsewhere, according to sources close to the negotiations.

The offer is a major concession from GOP Members, who have held that Congress should pay for an extension of the $100 billion tax cut through the end of 2012.

It is unclear whether Democrats have accepted the GOP offer.

In a move seemingly designed to pressure Democrats into action, House Republican leaders said today they will bring a backup plan to the floor this week.

“Today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the ‘doc fix,’” Speaker John Boehner (Ohio), Majority Leader Eric Cantor (Va.) and Majority Whip Kevin McCarthy (Calif.) said in a joint statement. “If Democrats continue to refuse to negotiate in good faith, Republicans may schedule this measure for House consideration later this week pending a conversation with our Members.”

Negotiators still would have to haggle out differences on policy changes and offsets to unemployment insurance, as well as scheduled cuts to payments to Medicare doctors, which tack another $60 billion onto the total payroll package. There had been some discussion over the weekend to separate out the “doc fix” from the larger package, but a Democratic leadership aide said the party is fighting to keep the provision included in whatever the conference reports.

Democratic aides noted that dropping the demand for offsets was a significant shift in the GOP position and that it reflected the Republican desire to wrap up a deal and not get pinned for a lapse in benefits. The GOP had taken the brunt of disapproval on almost botching a two-month extension in December, when House Republicans backed away from an agreement between Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.).

Though such an offer marks a breakthrough in the previously stalled talks, it is unlikely the conservative wing of the House GOP Conference would support legislation that would add to the deficit. If that is the case, it is unclear if House GOP leaders are willing to buck their right wing and bring such a bill to the floor.

In previous Congresses, both tax cuts and unemployment benefits were passed without being offset.

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