Payroll tax deadlock ends as House caves

House Minor­ity Whip Rep. Steny Hoyer, D-Md., is fol­lowed by reporters after hold­ing a news con­fer­ence on the pay­roll tax cut on Capi­tol Hill on Thurs­day, Dec. 22, 2011 in Wash­ing­ton. (AP Photo/Evan Vucci)

ANDREW TAYLOR, LAURIE KELLMAN

Asso­ci­ated Press

WASHINGTON (AP) — House Repub­li­cans on Thurs­day caved to demands by Pres­i­dent Barack Obama, con­gres­sional Democ­rats and fel­low Repub­li­cans for a short-term renewal of pay­roll tax cuts for all work­ers. The break­through almost cer­tainly spares work­ers an aver­age $20 a week tax increase Jan. 1.

After days of wran­gling that even Speaker John Boehner acknowl­edged “may not have been polit­i­cally the smartest thing in the world,” the Ohio Repub­li­can abruptly changed course and dropped demands for imme­di­ate hol­i­day sea­son talks with the Sen­ate on a full-year mea­sure that all sides said they want.

The House and Sen­ate plan to act on the two-month exten­sion Friday.

House Repub­li­cans were under fire from their con­stituents and GOP estab­lish­ment fig­ures incensed that they would risk los­ing the tax cut issue to Democ­rats at the dawn of the 2012 pres­i­den­tial and con­gres­sional elec­tion year.

“In the end House Repub­li­cans felt like they were reen­act­ing the Alamo, with no rein­force­ments and our friends shoot­ing at us,” said Rep. Kevin Brady, R-Texas.

Boehner said he expects both House and Sen­ate to pass a new bill by Christ­mas that would renew the tax break while con­gres­sional nego­tia­tors work out a one-year mea­sure that would also extend job­less ben­e­fits for mil­lions of Amer­i­cans and pre­vent doc­tors from absorb­ing a big cut in Medicare payments.

The devel­op­ments were a clear win for Obama. The pay­roll tax cut was the cen­ter­piece of his three-month campaign-style drive for jobs leg­is­la­tion that seems to have con­tributed to an uptick in his poll numbers.

“Because of this agree­ment, every work­ing Amer­i­can will keep his or her tax cut — about $1,000 for the aver­age fam­ily,” Obama said in a state­ment. “That’s about $40 in every pay­check. And when Con­gress returns, I urge them to keep work­ing to reach an agree­ment that will extend this tax cut and unem­ploy­ment insur­ance for all of 2012 with­out drama or delay.”

If the cuts had expired as sched­uled, 160 mil­lion work­ers would have seen a 2 per­cent­age point increase in their Social Secu­rity taxes. And up to 2 mil­lion peo­ple with­out jobs for six months would start los­ing unem­ploy­ment ben­e­fits aver­ag­ing $300 a week.

The GOP retreat ends a tense stand­off in which Boehner’s House Repub­li­cans came under great pres­sure to agree to the short-term exten­sion passed by the Sen­ate on Sat­ur­day. The speaker was ini­tially open to the idea, but rank and file Repub­li­cans revolted and the House instead insisted on imme­di­ate talks.

The con­flict arose after the Sen­ate, on a bipar­ti­san vote, passed leg­is­la­tion last week to extend for two months the pay­roll tax cut, job­less ben­e­fits and doc­tors’ Medicare fees that oth­er­wise would have been cut 27 per­cent. The House had just days before passed a full-year exten­sion that included a series of con­ser­v­a­tive pol­icy pre­scrip­tions unpalat­able to Obama and con­gres­sional Democrats.

Obama, Repub­li­cans and con­gres­sional Democ­rats all said they pre­ferred a one-year exten­sion but the pol­i­tics of achiev­ing that eluded them. All pledged to start work­ing on that in January.

“Has this place become so dys­func­tional that even when we agree to things we can’t do it?” Obama asked. “Enough is enough.”.

The top Sen­ate Repub­li­can, Mitch McConnell of Ken­tucky, was a dri­ving force behind Thursday’s agree­ment, implor­ing Boehner to accept the deal that McConnell and Sen­ate Demo­c­ra­tic Leader Harry Reid had struck last week and passed with over­whelm­ing sup­port in both parties.

“There remain impor­tant dif­fer­ences between the par­ties on how to imple­ment these poli­cies, and it is crit­i­cal that we pro­tect middle-class fam­i­lies from a tax increase while we work them out,” Reid said after Boehner’s announcement.

The break­through emerged as a fire­wall erected by tea party-backed House Repub­li­cans crum­bled Thursday.

“I don’t think that my con­stituents should have a tax increase because of Washington’s dys­func­tion,” said fresh­man Rep. Sean Duffy, R-Wis.

The Repub­li­can estab­lish­ment, too, put new pres­sure on House Repub­li­cans to compromise.

The 2008 GOP pres­i­den­tial nom­i­nee, John McCain, for­mer Bush admin­is­tra­tion con­fi­dant Karl Rove and The Wall Street Jour­nal edi­to­r­ial page were among con­ser­v­a­tive voices urg­ing House Repub­li­cans to retreat.

Just hours before he announced the break­through, Boehner had made the case for a year-long exten­sion. But on a brief late after­noon con­fer­ence call, he informed his col­leagues it was time to yield.

“He said that as your leader, you’ve in effect asked me to make deci­sions easy and dif­fi­cult and I’m mak­ing my deci­sion right now,” said Rep. Jack Kingston, R-Ga., para­phras­ing Boehner’s comments.

Kingston said the con­fer­ence call lasted about three min­utes and Boehner did not give any­one time to respond.

Almost for­got­ten in the firestorm is that McConnell and Boehner had extracted a major vic­tory last week, win­ning a pro­vi­sion that would require Obama to make a swift deci­sion on whether to approve con­struc­tion of the Key­stone XL oil pipeline, which would bring Cana­dian oil to the U.S. and cre­ate thou­sands of con­struc­tion jobs. To block the pipeline, Obama would have to declare that is not in the nation’s interest.

Obama wanted to put the deci­sion off until after the 2012 election.

Posted by AP News on Dec 22 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.