Stabenow: Bipartisan legislation to extend middle class tax cut rejected by House as deadline looms

WASHINGTON -- U.S. Senator Debbie Stabenow today made the following statement after House Republicans rejected Senate legislation, which passed with an overwhelming bipartisan majority of 89-10 over the weekend, to extend a critical tax cut for middle-class families. Unless Congress acts before the end of this month, a two-percent payroll tax cut for middle-class families will expire at the end of the year, and families will see an average tax hike of approximately one thousand dollars.

"I am deeply disappointed that House Republicans have rejected a bipartisan plan to extend a critical tax cut for middle-class families. The vast majority of Americans simply cannot afford to get hit with a tax hike starting January 1st. An overwhelming number of Democrats and Republicans in the Senate came together to prevent this tax hike, but unfortunately House Republicans continue to play politics."

Senate Democrats first proposed a one-year payroll tax cut extension earlier this year -- which also would have expanded the payroll tax to give the average middle class family in Michigan an additional $400 tax cut (for a total of about $1400), and also cut payroll taxes for small businesses -- paid for by a 3.25 percent surtax on income in excess of one million dollars. Republicans rejected that.

Senate Republicans then put forward their own plan paid for by a variety of spending cuts and fees, including increasing Medicare costs for seniors -- BUT A MAJORITY OF REPUBLICANS rejected their own party’s plan.

Democrats then offered a compromise one-year extension by dropping a tax cut for businesses, but keeping the expanded payroll tax cut for middle-class families, paid for with a mix of Republican proposals as well as a 1.9 percent millionaire surcharge. Republicans rejected that.

Finally, Senate Democrats agreed to drop any surcharge on millionaires whatsoever, reaching a bipartisan compromise with Republicans on a two-month extension funded by increasing the fees that Fannie Mae and Freddie Mac charge mortgage lenders. A two-month extension was all that could be negotiated with Senate Republicans, but that extension at least keeps middle-class families from being hit with a tax increase while negotiations continue on a longer term tax cut. That bill passed 89-10.

House Republicans have now rejected the Senate’s bipartisan compromise to extend the payroll tax cut. The House instead voted to create yet another committee to further negotiate this issue while the clock ticks toward a $1,000 tax increase on the middle-class January 1st.

Editor's note: According to an email from U.S. Rep. Nancy Pelosi (D-California), it was Tea Party Republicans who blocked a bipartisan bill to extend President Obama’s payroll tax cut.

"Now, middle class Americans could see their taxes increase by $1,000 on January 1st unless Speaker Boehner, Eric Cantor and House Republicans back down from their extreme stance," Pelosi said.

Click here to see House Floor activities for Dec. 20, 2011 and click on Roll No. 946 to see how your Congressman voted.