WASHINGTON (Reuters) ? The fate of an expiring tax break for 160 million American workers was in doubt on Sunday after the top Republican lawmaker distanced himself from a two-month extension just passed by Democrats and many fellow Republicans in the Senate.
House of Representatives Speaker John Boehner's comments highlighted a divide between Republicans in the House and the 100-seat Senate, which passed the deal with 89 votes on Saturday.
Boehner said on NBC's "Meet the Press" program that the two-month renewal would create added uncertainty for workers, and employers and Congress should delay its holiday break to ensure that a one-year extension was passed.
"It's pretty clear that I and our members oppose the Senate bill. It's only for two months," Boehner said, adding that this was "kicking the can down the road."
The House is scheduled to vote on the Senate-passed legislation on Monday and will either amend it or request formal last-ditch negotiations with the Senate.
Boehner said he wanted House-Senate leaders to reconvene for talks.
"We really do believe it's time for the Senate to work with the House to complete our business for the year. We've got two weeks to get this done. Let's do it the right way."
Despite, the latest roadblock to Congress wrapping up its business for the year, the White House remained optimistic that a deal on the two-month extension could be finalized soon.
"I really think it is very unlikely that the House would disrupt this compromise ... six days before Christmas," White House economic adviser Gene Sperling said on CNN's "State of the Union" program.
YEAR-END TAX HIKE LOOMS
By opposing the Senate bill, Boehner is siding with conservative and Tea Party-backed Republicans in the House whom he has had difficulty bringing under control all year, particularly on budget and spending measures.
They defied his leadership in debt-limit negotiations that brought the United States to the brink of default over the summer and cost Washington its prized Triple-A credit rating from Standard & Poor's.
Boehner's hardline stance on Sunday illustrated the quandary he is in - caught between wanting to appease a rebellious caucus and trying to reach a deal in time to ensure Republicans are not blamed for taxes going up in January.
Boehner is widely viewed as a pragmatist and was one of the Republican leaders pushing a skeptical rank-and-file to support extending the payroll tax cut or risk a backlash from angry voters in 2012 congressional and presidential elections.
Senate Majority Leader Harry Reid, a Democrat, noted on Sunday that Boehner had left negotiations on a compromise deal to Reid and his Republican counterpart Senator Mitch McConnell.
Boehner was also known to have been kept informed of the Senate negotiations that produced a deal on Friday night.
"Last week, Speaker Boehner sat in a meeting with Leader Reid and Leader McConnell and he gave Leader McConnell his proxy to negotiate a bipartisan compromise," Democratic Senator Charles Schumer said in a statement. "He made public comments promising to live by whatever agreement the Senate reached. "The Senate came to a deal, and now Speaker Boehner must keep his word."
The high-stakes game of brinksmanship over the payroll tax extension could backfire for Republicans, especially if it is allowed to expire at year-end, resulting in a tax hike of about $1,000 for the average worker. The payroll tax funds the Social Security federal retirement program.
Economists argue that a higher tax would drain stimulus and consumer spending from the U.S. economy at a critical stage in the recovery, and Republicans could become vulnerable to attacks from Democrats that they only favor tax cuts for the wealthy.
But an extension of just two months would force Congress into another round of negotiations over payroll taxes in February, when the Republican primary season is in full swing, and incumbents could draw challenges from Tea Party conservatives. Democrats would also get another opportunity to paint them as reluctant to help working Americans.
President Barack Obama, a Democrat, says the lower 4.2 percent payroll tax rate will help boost economic growth. Without congressional action, the rate on the tax workers pay into the Social Security retirement fund will snap back to 6.2 percent.
PIPELINE SWEETENER
The two-month extension passed by the Senate contains a provision sought by House Republicans that would force Obama to accelerate a decision on TransCanada Corp's Keystone XL oil pipeline project, which is backed by some labor unions but opposed by environmental groups.
Obama wanted to take a year, beyond November's elections, to review the project, which would connect Canada's tar sands to U.S. Gulf of Mexico refineries. Republicans argue that the pipeline would create jobs at a time when the economy is struggling with an 8.6 percent unemployment rate.
The biggest sticking point for a year-long extension is how to cover the $120 billion in lost revenue to the Social Security Trust Fund. Republicans are demanding spending cuts to cover the cost and Democrats want to pay for it by closing some tax breaks for the wealthy.
Beyond a one-year extension, Boehner said House Republicans are demanding reforms to the federal unemployment insurance program to cut the number of weeks for benefits - measures largely opposed by Democrats.
The package also includes a provision to avert a pay cut for doctors treating the elderly on the Medicare healthcare program.
(Reporting by David Lawder and Donna Smith; editing by Ross Colvin and Anthony Boadle)
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