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Speaker Boehner calls retreat on payroll tax

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    What will happen with the payroll tax cut?

  • Duration 4:12
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This transcript is automatically generated

Back to politics now with -- Alexander Bolton who was a serious stoplight -- With the hill at bay hill dot com I've recommended fuel before that you read it every day it's a fascinating insight into what is going on.

In Washington which is never -- easy as well to understand.

I'm Alexandra walked.

One thing that seem to have resolved to -- -- today I guess I happening in Washington.

Was this Republican that retreat on the payroll tax cut -- on -- did it come about and why.

Well it came about because he.

Conference right now -- happened between the senate and the house in the sense controller Democrats house controlled by Republicans.

It's coming to a standstill and the -- payroll tax holiday.

Is about to let it expire at the end of the month February 20 ninth.

That means a 160 million Americans will see their taxes go up by about.

On average.

800 dollars for the rest of the year.

And this is a fight that -- -- Democrats had in December and the Republicans lost it.

And they calculation by the Republican leaders right now is that they cannot match president Obama's bully pulpit and that if the did the -- Tax cuts if this payroll tax holiday expires President Obama will be able to successfully blame them.

For a causing americans' taxes to go up and so.

Republican leaders have made that calculation of the fight's not winnable so what they're proposing is to keep -- payroll tax.

Holiday in place and to just add to the deficit.

Because they cannot reach agreement on how to pay for it Republicans have proposed freezing federal pay.

Reducing the number of federal employees Democrats refused to budge because they know full well they have Obama and the bully pulpit.

And will probably win the battle for public opinion so it's purely a political move it sort of hanging the policy.

What we think is best let's do what's best for us politically.

I think I think that's exactly what it is and Republicans from the get go to don't think that that the payroll tax holiday is great policy.

They say that there are other tax cuts -- have more of an impact on the economy.

They raise concerns it'll -- Social Security.

In fact many -- -- think it's bad tax Bob policy however they realize it's politically very dangerous nine months out from election to be blamed for raising.

The taxes of a 160 million Americans.

I still Alexander that related to I guess the tax issue is the budget issue.

President Obama publishing -- publishing putting -- budget proposals but 2013.

Yes today -- Republicans we're hearing could be another month -- so from firing back with their ideas why so long.

Well it typically takes congress a while to digest the president's budget and come up with their own proposals.

It's nothing unusual or something the -- that.

That we always see.

That it congress so takes up a couple weeks after the president comes out with it.

His budget to respond that's causes and create extremely complex document there are lots of decisions that that have to be made.

Further the house Republicans the biggest decision however is what to do on Medicare.

Last year.

Paul Ryan chairman of the House Budget Committee that he came out some pretty dramatic reforms to Medicare system and the Democrats.

Attacked him relentlessly and it and Democrats and I think so -- and acknowledged there's a potent issue in twenty.

2012 later this year November.

Seniors.

Senior voters flocked to the Republican Party in 2010 that's -- the reasons why Democrats did so poorly.

Senior voters flocked to that ever Republicans and when he ten.

Because of the Obama Health Care Reform bill which cut Medicare.

By about 500 billion dollars.

It's.

That is what Republicans are worried about if they come out with -- some.

If they propose again the same drastic reforms were dramatic reforms are significant reforms to Medicare that they didn't 2010.

Could they be jeopardizing the senior vote in November and that's a decision they need to make and that's maybe why they would like a few more weeks -- to hash out amongst -- caucus.

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