Republicans say they want a year-long extension of the tax cut, but by refusing to accept the Senate compromise, they're putting the tax cut in jeopardy. It's due to expire at the end of the year.
It looked like the Senate was leading the way to a bipartisan compromise to extend the payroll tax cuts, until Speaker of the House John Boehner refused to go along.
"Our members do not want to just punt and do a two-month short-term fix where we have to come back and do this again," he said.
The speaker is calling on the Senate to come back from its holiday break and work on a year-long deal, but Senate Democratic leaders say they've already compromised.
"To renegotiate risks the middle class tax cut never going to the middle class," said Sen. Charles Schumer, D-New York.
The tax break is worth about a thousand dollars a year to the average working family and it affects roughly 160 million Americans.
"I think that it's a travesty for working people and for people who don't make a lot of money," said Marian Ivan of San Francisco.
Voters ABC7 talked with Monday afternoon overwhelmingly support the tax cut extension. Polls show the great majority of Americans favor it.
"I think that Congress needs to think long and hard about when they're making these kinds of decisions that it has a larger repercussion on the rest of the public," said Lesly Simmons of San Francisco.
"I wish they'd just get something done that would be good for the country," said Tom Noble of Fresno. "Seems like there's always political motives and we have an election year coming up."
"I guess I'm in that group of people that don't have much confidence in what's happening on the Hill," said Jim Cox of San Francisco.
ABC7's political analyst says House Republicans are making a mistake.
"If it looks like the Republican House is obstructing this and not the Democrats and not even the Senate Republicans, this isolates the blame on the House Republicans and makes them more vulnerable in the upcoming election," said Cain. "So, I think it is a mistake."
The House was due to vote on the extension Monday evening, but Boehner now says the House will vote Tuesday. Boehner says there is no support for the Senate's two-month extension, but Democrats say they only need a couple dozen Republicans to break ranks.