House Balks At Senate Payroll Package, Calls For Conference

UPDATE — House Speaker John Boehner (R-Ohio) called on Senate Democrats and President Obama to remain in Washington throughout the holidays to “work out our differences” and extend a payroll tax holiday for one year rather than approving a temporary, two-month extension.

“We’ve done our job, all we need now is to resolve our differences,” Boehner said Tuesday shortly after the House diapproved of a Senate bill to extend the payroll tax holiday. “There’s no reason we can’t do this in short order.”

Boehner also made clear, that despite previous reports that the House would adjourn following Tuesday’s votes, House GOP leadership and a handful of negotiators will remain “ready and able” to finalize a year-long extensions before Jan. 1. According to the Speaker, Reps. Kevin Brady (R-Texas), David Camp (R-Mich.), Renee Ellmers (R-N.C.), Nan Hayworth (R-N.Y.), Tom Price (R-Ga.), Tom Reed (R-N.Y.), Fred Upton (R-Mich.) and Greg Walden (R-Ore.) would be on hand and in Washington through the end of the year.

The House Speaker questioned the willingness of President Obama to increase his involvement by demanding Senate Democrats reconvene to hash out an agreement.

“Now it’s up to the president to show real leadership,” Boehner said. “He said that won’t leave town for the holidays until this bill is done. I think President Obama needs to call on Senate Democrats to go back into session move to go a conference, and to sit down and resolve this bill as quickly as possible. We’ve done our work for the American people and now it’s up to the president and Democrats in the Senate to do their obs as well.”

This story was updated at 2:34p.m. EST…

UPDATE — Just before 1:00p.m. EST Tuesday, the House voted 229-193 to disapprove of the Senate’s two-month payroll holiday extension, calling the upper chamber back to conference to work out their differences.

The vote puts pressure back on Senate Democrats to reconvene even though Senate Majority Leader Harry Reid (D-Nev.) has already said the upper chamber was done with votes for the year. Reid took to his Twitter account to respond to the House’s latest vote.

“Happy to cont. negotiations on a yearlong deal as soon as #House passes the #Senate’s compromise, & prevents tax hike from hitting mid class,” Reid tweeted.

Reid’s statement indicates that Senate Democrats will not likely return to conference with House Republicans.

According to a Democratic aide who spoke on the condition of anonymity, following the lower chamber’s scheduled votes Tuesday, House members plan to follow suit with the Senate and adjourn for the holidays, leaving no window for a conference to actually take place.

“No conference, no nothing, everything expires,” the Democratic source said.

This story was updated at 1:26p.m. EST…

WASHINGTON - The House is expected to vote Tuesday on a plan that would send a Senate-passed, two-year payroll tax cut extension into conference, a procedure that would allow Republicans to reject the upper chamber’s bill without actually voting against it. 

Though House Republicans will not formally reject the Senate-passed extension with a vote, GOP leaders have said that the move to conference with the upper chamber would serve as a vote against the Senate’s bill. 

House Republicans are vehemently opposed to the duration of the two-month extension drafted in the Senate. House Majority Leader Eric Cantor (R-Va.) has said it is an attempt to “kick the can down the road for 60 days” and Rep. Jeb Hensarling (R-Texas) has said the “two-month bill would do more harm than good.”

Despite an 89-10 vote in the upper chamber and approval from Senate Minority Leader Mitch McConnell (R-Ky.), House Republicans have opted to bring the bill to a conference in an effort to reach a deal that would extend the payroll tax package for a full year rather than accept a two-month-long extension. Democrats are taking the opportunity to label House Republicans as obstructionists.

“Speaker Boehner should allow an up-or-down vote on the compromise that Senator McConnell and I negotiated at Speaker Boehner’s request, and which was supported by 89 Republican and Democratic senators,” Senate Majority Leader Harry Reid (D-Nev.) said in a statement. “It would be unconscionable to block a bipartisan agreement that would protect middle-class families from the thousand-dollar tax increase looming on January 1. It is time for Speaker Boehner to follow through.”

Reid has indicated that he will not re-open negotiations over the duration of the payroll tax holiday until the House passes the two-month extension. 

Hoyer Blames GOP Leadership For 'Do Nothing' Congress

By Adrianna McGinley

House Minority Whip Steny Hoyer (D-Md.) told reporters at a press briefing Tuesday he remains hopeful that Republicans and Democrats will work in the last weeks of the year to pass economic recovery legislation, but the GOP must be willing to cooperate.

“There is no doubt in my mind that if Mr. Boehner, Ms. Pelosi, Mr. Cantor and I sat down and we could all agree that we’ll both come up with a majority, under the following circumstances…we could do it,” Hoyer said. “The issue is whether or not we’re going to do it in a bipartisan way or pursue a partisan message.”

Hoyer blasted Republicans for moving less than half the amount of legislation the Democratically-controlled Congress moved in 2007 under a Republican administration and attributed the lack of action to a complete unwillingness of the GOP to move away from political messages.

“They voted three times to end Medicare, we’re not going to do that, they continue to vote for it. [They] voted ten times on regulatory bills that do not create jobs…They voted 23 times against initiatives to create jobs…They voted 14 times to repeal patient protections and put insurance companies back in control of healthcare, they know that’s not going to pass the Senate, they know the president is not going to sign it. These are all political message bills for their base, a relatively narrow base.”

“We’ve moved a lot of legislation through the House which the speaker must have known, we knew, had no chance in the Senate, but it was their political message,” Hoyer added. “They’ve been pursuing their political message, not policy.”

When asked if he thinks House Speaker John Boehner (R-Ohio) is responsible, he said, “Yes, I think the Speaker bears responsibility. He is, after all, the leader.”

With the current continuing resolution expiring in two weeks, Hoyer said “we are going to urge staying here until we get [the sustainable growth rate, unemployment insurance, and payroll taxes] done.”

On the legislation proposing an extension and increase of the payroll tax, Hoyer said Republicans are alienating their constituents, citing that roughly 75 percent of Americans support raising taxes on millionaires to aid the middle class.

“I frankly think the millionaires’ tax is putting a lot of heat on the Republicans,” Hoyer said.

He criticized arguments that raising taxes on the wealthy would negatively affect small-business owners, saying it “is not going to impact at all, according to any economist, job creation in America. What it will do is give us resources to protect the most vulnerable in America.”

“Every bipartisan group that has looked at it says you cannot get to where we need to get if you do not deal with additional revenues, and very frankly, almost every Republican leader that I’ve talked to agrees,” Hoyer added.

While he does not want to see sequestration take effect, Hoyer said, Democratic leadership is not working to avoid it, and he believes Democrats will support a presidential veto on any legislation with that goal.

“We need to keep the sequester in place, but realize it is an incentive, a reason, a demand, if you will, that we come to an agreement and adopt a balanced response to the fiscal challenge that confronts us…The sequester was the discipline. If you now simply spend time figuring out ‘well how can we get around the sequester,’ frankly, it eliminate the discipline.”

UN Predicts Grim Economic Outlook for 2012

The world economy is on the brink of another recession and prospects for recovery will worsen unless the international community can strengthen cooperation, says the UN’s 2012 Report on World Economic Situation and Prospects.

“We have a situation where we may well be at risk of a double dip. In any case it is very likely there will be a further slow down.” says Jomo Kwame Sundaram, UN Assistant Secretary General for the Department Economic and Social Affairs (DESA).  

Sundaram and DESA director for policy and analysis Rob Vos where at the UN to preset an overview of the report, which will be released in the new year.

Sundaram says today’s announcement by China that its manufacturing sector had shrunk over the recent period is an ominous sign, especially for developing countries that for the most part had continued to do reasonably well during most of the crisis.

“We do not have the basis for a strong recovery in the developed world and what is likely to happen in the near future is the further deterioration of conditions in the developing world.” he said. “This current situation, in the view of the Chinese, is worst than the last quarter of 2008.”

Sundaram says the international community has so far failed to take collective action and adopt preventive measures to ensure possible future European debt problems can be contained. 

He says the complex political relationship between European national governments and the European Union framework, along with ideological differences between the White House and Congress have seriously limited any international consensus to addressing the crisis.

Rob Vos, Director of Policy and Analysis at DESA, says even in a best case scenario global economic growth will drop. 

“We project that the world economy could grow to 2.6% next year, that’s slightly down from 2.8% but that is already a pretty strong deceleration from what happened in 2010 when the world economy was growing at 4 percent.” 

Vos says projections are based on the assumption the European debt crisis will not reach the EU’s larger economies. But with both Italy and Spain coming under increased financial pressure, he says the worse case scenario is quite likely.

The report’s forecast also depends on Congress and the White House agreeing on the extension of payroll tax cuts and emergency borrowing benefits.

“If those two actions don’t happen, we estimate that the US economy could further slow by another one percentage point of growth next year, which would be further down from already slow growth of 1.7%.”

Vos says the US should also start thinking about short term stimulus measures to avoid an increase in home foreclosures, which he says continues to undermine the health of the banking sector and negatively impact the economy.

“There is weaknesses and some dangers in the mortgage market that because of the high unemployment, a lot of the home’s are underwater so to speak, that their debts are higher than the value of their homes, that there may be a need to give people more bridge loans to overcome those problems and to avoid more foreclosures.”

Is US Aid To Post-Election Egypt At Risk?

With the Muslim Brotherhood’s Freedom and Justice party likely to play an important role in the country’s next government, some observers are concerned the US Congress could cut funding to Egypt, one of America’s most important Arab partners and beneficiaries of foreign aid. 

US foreign assistance to Egypt is set to be over 1.65 Billion dollars in 2011, 1.3 billion of which is reserved for military aid. Other major areas of funding are economic development (246 million), Education (43 million) Democracy, Human Rights and Governance (30 million) Health (20 million) and Environment ( 10 million). 

Author and Council on Foreign Relations Middle Eastern Fellow Ed Husain says domestic political considerations and lack of knowledge about the Muslim Brotherhood could lead Congress to make a push for cuts, even if the preponderance of power will likely remain with the military after the election.

In June, House Foreign Affairs Committee Chairman Ileana Ros Lehtinen (R-FL) was quick to criticize Egypt’s military leaders for recognizing the Brotherhood’s Freedom and Justice Party and threatened action. 

“The Muslim Brotherhood is committed to violence and extremism. Neither freedom nor justice will be advanced by any political party established by the Muslim Brotherhood.” she said in a June 8 statement . “United States policy must reflect this reality, and the Administration must not engage the Muslim Brotherhood, or allow direct or indirect U.S. assistance to benefit that organization.”

“Sadly there is a mindset and advocacy around Congress that flies in the face of facts. So the Muslim Brotherhood is being portrayed as a monolithic movement, the diverse strands of thought within the Muslim Brotherhood are not understood by most people on the Hill.” Husain said in a CFR organized conference call from Cairo. 

He says he is concerned the group’s long and often controversial history will make it an obvious target.

“Its easy to build up an argument and say “The Brotherhood supported Hamas, the Brotherhood supported the Nazi’s, the Brotherhood was a terrorist organization through out the 1940’s, the Brotherhood is an anti - US organization. Why should US taxpayers fund the Muslim Brotherhood?” Those are the kinds of arguments that are going to be thrown into the public space in the US and my fear is that it is going to be difficult to add caveat, nuance and balanced thinking amidst that storm.” 

Husein says regions of Egypt that have so far voted have done so peacefully despite a scuffle in high profile area of Cairo between an Islamist and Liberal candidate and a shoot out in the city of Asyut. He says he has visited 20 or so polling station over the past two days and that while he remains critical of the Brotherhood, its members are by far the most active and well organized.

“They are the only force out there that a) have a manifesto, b) have some kind of vision as what they want to bring about and c) have the mechanisms to do so.” 

Husain says he has been in contact with members of the Muslim Brotherhood’s three main factions and that the driving force behind its focused campaign is the faction of deputy leader Khairat el Shater, an engineer and successful banker who was imprisoned for more than ten years under the Mubarak regime. 

“He understands liberal economics, he understands capitalism, he was educated in Britain, he is not a man who is cut off from the rest of the world like some of the older leaders of the past.” Husain said of el Shater.

Husain says the Brotherhood has been consulting with the Turkish and Qatari governments and had reportedly hired a “top five” Western accountancy firm to help it devise policy mechanisms. 

“The vast majority of their leadership is dominated by people from engineering, medical and other professional backgrounds so they are by nature almost technocrats who are have given to managing large institutions.”

Hussein says the Obama administration has adjusted its policy towards the Brotherhood, since Secretary of State Hilary Clinton refused to meet with members of the group six months ago. 

He says the US is now engaging with its leaders, but the administration’s future relationship with the group remains unclear.  Husein says he believes Freedom and Justice officials will be looking for constructive engagement with the US as well as a possible free trade agreement, but that Congress’s likely hostility to the group could be a significant obstacle.

Vote On Balanced-Budget Amendment Sees Some Democratic Support

The House will vote on a balanced-budget amendment Thursday afternoon in a move that has Democratic leadership conducting last-minute damage control stemmed from conservative Democrats’ vow to pass the measure. 

Following the endorsement by the 25-member Blue Dog Coalition, a group of conservative Democrats, House Minority Whip Steny Hoyer (D-Md.) has begun rallying against the bill, despite having voted in favor of a similar amendment in 1995. Hoyer has argued that his new position against the balanced budget amendment stems from his lack of trust in the Republican Party as a fiscally responsible entity. 

House Republicans have been quick to reinforce the support from conservative Democrats, urging both chambers of Congress to pass the measure. Some members of the GOP’s freshman class banded together Thursday to criticize Pelosi and Democratic efforts to reject the measure. 

“[Democratic leaders] are actively, actively lobbying for a ‘no’ vote. Why? One word; politics,” Rep. Tim Griffin (R-Ark.) said. “Leader Pelosi told them to do it, that’s why they’re doing it.”

Democrats like Rep. Peter DeFazio have provided Republicans with ammunition in this debate. In a letter to rank-and-file Democrats, DeFazio bucked his party’s leadership and urged his colleagues to support the amendment. 

“I believe our leadership is making a strategic mistake asking Democrats who support a balanced-budget amendment to make a partisan stand against it,” DeFazio’s letter reads. “If Democrats walk away from this sincere bipartisan effort, we will have let the American electorate down.”

A majority of Republicans are expected to vote in favor of the measure despite growing concerns that the amendment excludes a two-thirds requirement to hike taxes. Earlier in the week, House Majority Leader Eric Cantor (R-Va.) told reporters that, if he had his way, he would rather the House consider a stronger amendment.

Even though a constitutional amendment does not require any presidential action, the White House has reinforced Democratic opposition to the measure with a statement of its own. 

If all House members vote, Republicans would have to rake in 290 votes - meaning 48 Democrats would have to break party ties - to pass the measure.