Local representatives join majority in rejecting payroll tax compromise

Local U.S. representatives joined the Republican majority in the House and rejected a compromise this week on an extension to reduced payroll taxes and unemployment insurance.

While much of the chatter among political pundits and writers over the last couple of days has been about the length of the extension – two months – a major point of contention for congressional Republicans is the so-called MACT rule that’s in the legislation. These are Environmental Protection Agency rules that require businesses across the country to reduce emissions from industrial boilers.

The Senate and the House have been talking about legislation that includes payroll and unemployment insurance extensions for a couple months. The House passed a version of the legislation last week, but the Senate rejected that language.

Payroll taxes are set to increase Jan. 1, potentially costing 160 million Americans around $1,000 next year.

Hoping not to see taxes increase and give the House and the Senate time to continue negotiations, the Senate passed a two-month extension to unemployment insurance and payroll taxes.

The Senate compromise, which the House rejected, did not contain any language about the MACT rules. The Senate did, however, include language that requires President Obama to make a decision on an oil pipeline, called the Keystone XL, within 60 days.

U.S. Reps. Phil Roe (R-Johnson City) and Morgan Griffith (R-Salem) have been huge advocates for including language that loosens EPA regulations on industrial boilers and have attached the idea to any payroll tax and unemployment insurance legislation.

“I support the inclusion of the Boiler MACT provisions in any final payroll tax holiday agreement,” Griffith said in a released statement.

He reiterated the sentiments in a phone interview with the Herald Courier Wednesday, saying “Absolutely it is a point of contention.”

Roe issued a similar statement after the vote: “While I’m pleased that the Senate relented on trying to block the Keystone XL pipeline, we also need to rein in the Environmental Protection Agency (EPA), including its Boiler MACT regulations.”

Griffith said 200,000 jobs “were at risk” from the new EPA regulations, and Roe said 8,400 of those alone are in Tennessee.

But if a compromise is not reached on unemployment insurance and payroll taxes, many economists say there will certainly be less job creation and even job losses on top of the higher taxes many Americans would pay next year.

The International Franchise Association estimates that a lack of legislation on payroll taxes alone could jeopardize the creation of 168,000 jobs next year.

“If Congress does not extend the payroll tax holiday, Americans will have less discretionary income, increasing an already high level of uncertainty,” International Franchise Association President and CEO Steve Caldeira said.

Alan Krueger, chairman of the President’s Council of Economic Advisors, expressed similar views at a speech Wednesday in Charlotte, N.C.

“Many economists have boosted their forecasts of economic growth for next year on the assumption that the payroll tax cut and extended unemployment benefits will stay in effect,” he said. “However, the extension of the payroll tax cut and unemployment benefits now faces an uncertain future in the House of Representatives.

U.S. Sen. Lamar Alexander (R-Tennessee) has been a huge advocate for limiting regulations on industrial boilers and spoke on the Senate floor last month about his concerns over the MACT rules. He said it would mean an increased burden for Eastman Chemical and other Tennessee companies.

“As a result, little businesses and big businesses all over America are going to be forced to spend hundreds of millions of dollars trying to comply with this rule instead of spending money on creating jobs,” Alexander said.

Alexander, however, voted for the Senate compromise bill, which was negotiated by Democratic and Republican leaders in the Senate. He was joined by the two Democratic senators from Virginia – Sens. Jim Webb and Mark Warner.

Sen. Bob Corker (R-Tennessee) voted against the two-month extension.

Griffith said he was willing to vote for a package that did not include a change to the MACT rule but “would have to see the individual package.” He understands House Republicans have taken a difficult position but he wants the Senate to negotiate in good faith.

“I understand the people are hurting, and we need to listen to that,” Griffith said.