WASHINGTON (MNI) – The failure of the U.S. Senate, for now, to pass
the bill maintaining payroll tax relief for middle class Americans and
businesses means all eyes are now on the House, and whether Speaker John
Boehner can muster enough support to push through his own measure to
extend the tax cuts.

The vote in the Senate Thursday night was almost entirely along
party lines, finishing 51-49, with the Democrats failing to secure the
60 votes needed to halt a filibuster.

There is some hope that both sides can reach a compromise, and
there are indications some within the GOP might be softening their
anti-tax stance.

Boehner told reporters Thursday that, “I don’t think there’s any
question that the payroll tax relief, in fact, helps the economy.”

House Republicans will unveil their payroll tax cut plan, and how
it will be paid for, next week. How it is received by Democrats will
depend on if the measure includes spending cuts that they find difficult
to stomach.

The bill defeated in the Senate was a key proposal in President
Barack Obama’s American Jobs Act, and would have extended the payroll
tax cut for workers and expand the cuts to employers. To pay for the
cuts, the bill would have imposed a 3.25% surcharge, or “millionaire’s
tax,” on Americans with income over $1 million.

The White House was quick to point the finger at the GOP. Obama in
a statement accused Senate Republicans of choosing to “raise taxes on
nearly 160 million hardworking Americans because they refused to ask a
few hundred thousand millionaires and billionaires to pay their fair
share.”

“Now is not the time to put the economy and the security of the
middle class at risk,” Obama said. “I will continue to urge Congress to
stop playing politics with the security of millions of American families
and small business owners and get this done.”

The Republicans had offered an alternative plan earlier Thursday,
which would have extended the payroll tax cuts for one year, paid for by
a freeze in federal workers’ pay together and weeding out more federal
jobs while also raising Medicare costs for those with incomes above
$750,000 a year. A vote to proceed on the bill failed by 20-78, with
opposition from both sides.

** Market News International Washington Bureau: 202-371-2121 **

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