WASHINGTON (Reuters) - The top Republican in Congress said on Thursday that extending a payroll tax cut for workers would boost the U.S. economy, putting himself at odds with members of his party who are skeptical of its benefits.
Minutes after declaring “I‘m not an economist. I don’t know what kind of impact it’s going to have,” Speaker of the House of Representatives John Boehner said renewal of the tax cut would be economically beneficial.
“I don’t think there is any question that the payroll tax relief, in fact, helps the economy, in allowing more Americans ... to keep more of their money,” Boehner said when pressed by reporters.
Boehner’s comments, quickly welcomed by the White House, were in sharp contrast to what members of his party were saying just days ago.
Many Republican lawmakers are skeptical that extending the tax cut beyond this year will help job creation and say it will have only a temporary effect on the economy.
The White House, investment banks and some economists have warned in recent days that U.S. economic growth could suffer in 2012 if the cuts are allowed to expire.
Until earlier this week, Republicans had been lukewarm to extending the payroll tax cut, but they have come under political pressure to do so in advance of the 2012 presidential and congressional elections.
“Republicans have finally felt the heat of doing something about the payroll tax cut,” said House Democratic Leader Nancy Pelosi.
But Boehner said his party was sticking to its demand that the tax cut be paid for and not add to the country’s $15 trillion debt.
Obama has proposed a tax increase on wealthy Americans, but Republicans have rejected that, saying it would hurt business owners who generate jobs.
White House spokesman Jay Carney called it progress that Boehner backed extension, but he rejected a Senate Republican plan to pay for it as an “unbalanced approach.”
Senate Republicans offered a plan on Wednesday to cover the projected $120 billion cost of extending the tax cut. It would continue a pay freeze for federal workers through 2015 and gradually reduce the federal workforce by 10 percent.
The Senate could begin voting as early as Thursday evening on competing funding plans by Democrats and Republicans. Both proposals will likely fail, triggering intensive negotiations on a compromise.
Without congressional action by December 31, the payroll tax that workers pay would revert to 6.2 percent, up from the current, temporary 4.2 percent tax. On average, it would cost American families about $1,000 a year.
Additional reporting by Donna Smith, Rachelle Younglai and Caren Bohan; Editing by Ross Colvin and Eric Walsh