The U.S. Capitol in Washington, Tuesday, Dec. 20, 2011. Partisan to the core, Congress careened toward a holiday-season standoff on legislation to prevent a Social Security payroll tax increase for 160 million workers on Jan. 1. (AP Photo/Susan Walsh)
The U.S. Capitol in Washington, Tuesday, Dec. 20, 2011. Partisan to the core, Congress careened toward a holiday-season standoff on legislation to prevent a Social Security payroll tax increase for 160 million workers on Jan. 1. (AP Photo/Susan Walsh)
House Speaker John Boehner of Ohio, surrounded by his colleagues, speaks during a news conference on Capitol Hill in Washington, Tuesday, Dec. 20, 2011. The House Tuesday rejected a plan backed by President Barack Obama to extend a 2 percentage point payroll tax cut for two months to buy time for talks on a full-year renewal. Republicans controlling the chamber are instead demanding immediate talks with the Senate on a year-long plan. (AP Photo/Susan Walsh)
House Speaker John Boehner of Ohio, surrounded by Republican House members speaks during a news conference on Capitol Hill in Washington, Tuesday, Dec. 20, 2011. The House rejected a plan backed by President Barack Obama to extend a 2 percentage point payroll tax cut for two months to buy time for talks on a full-year renewal. Republicans controlling the chamber are instead demanding immediate talks with the Senate on a year-long plan. (AP Photo/Susan Walsh)
President Barack Obama speaks during the news briefing at the White House, Tuesday, Dec. 20, 2011, in Washington. In a surprise appearance in the White House briefing room on Tuesday, the president said a "faction" of Republicans in the House is refusing to vote on a Senate bill that would extend a payroll tax cut for two months. (AP Photo/Carolyn Kaster)
President Barack Obama pauses as he speaks during the news briefing at the White House, Tuesday, Dec. 20, 2011, in Washington. In a surprise appearance in the White House briefing room on Tuesday, the president said a "faction" of Republicans in the House is refusing to vote on a Senate bill that would extend a payroll tax cut for two months. (AP Photo/Carolyn Kaster)
WASHINGTON (AP) ? The House Tuesday rejected legislation to extend a payroll tax cut and jobless benefits for two months, drawing a swift rebuke from President Barack Obama that Republicans were threatening higher taxes on 160 million American workers on Jan. 1.
Obama said the two-month compromise is the only way to stop payroll taxes from going up by two percentage points.
"Now let's be clear," Obama said in a surprise appearance in the White House briefing room after the House vote. "The bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on January 1st. The only one."
Obama said failure to pass the Senate version of the payroll tax cut extension could endanger the U.S. economic recovery, which he described as "fragile but moving in the right direction."
House Republicans controlling the chamber want instead immediate negotiations on a year-long plan with the Senate ? where the top Democrat again ruled out talks until the House passes the stopgap measure.
"President Obama needs to call on Senate Democrats to go back into session ... and resolve this bill as soon as possible," said the Republican leader of the House, Speaker Boehner. "I need the president to help out."
If Congress does not break the stalemate and pass a bill by the end of the year, payroll taxes will go up by 2 percentage points for 160 million workers on Jan. 1. Almost 2 million people could lose unemployment benefits in January as well.
The House vote, 229-193, kicks the measure back to the Senate, where the bipartisan two-month measure passed on Saturday by a sweeping 89-10 vote. The Senate then promptly left Washington for the holidays. Senate Majority Leader Harry Reid, a Democrat, says he will not allow bargaining until the House approves the Senate's short-term measure.
"I have been trying to negotiate a yearlong extension with Republicans for weeks, and I am happy to continue doing so as soon as the House of Representatives passes the bipartisan compromise to protect middle-class families, but not before then," said Reid.
The House vote caps a partisan debate on Obama's jobs agenda, which has featured numerous campaign-style appearances but little real bipartisan negotiation, other than Senate talks last week that produced the two-month extension.
The Senate's short-term, lowest-common-denominator approach would renew a 2 percentage point cut in a payroll tax, plus jobless benefits averaging about $300 a week for the long-term unemployed. The $33 billion cost would be financed by a .10 percentage point hike in home loan guarantee fees charged by government-backed mortgage giants Fannie Mae and Freddie Mac, which the administration says would raise the monthly payment on a typical $210,000 loan by about $15 a month.
The House passed a separate plan last week that would have extended the payroll tax cut for one year. But that version also contained spending cuts opposed by Democrats and tighter rules for jobless benefits.
Both the House and Senate bills included a provision designed to force Obama to make a decision on construction of the controversial Keystone XL pipeline, which would deliver up to 700,000 barrels of oil daily from tar sands in Alberta, Canada, to refineries in Texas. The provision requires him to issue the needed permit unless he declares the pipeline would not serve the national interest.
Democrats and the White House had reversed course and accepted Republican demands on Keystone, which contributed to sweeping Republican support for the Senate measure. The White House had signaled that Obama would block the project.
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