Tax cut survives: Congress votes holiday approval

ANDREW TAYLOR

Asso­ci­ated Press

WASHINGTON (AP) — Barely beat­ing Santa’s sleigh, Con­gress deliv­ered a last-minute hol­i­day tax-cut exten­sion to 160 mil­lion Amer­i­can wage-earners on Fri­day, just when it looked like they and mil­lions of unem­ployed work­ers were going to be left with coal in their stockings.

It was a major yearend polit­i­cal vic­tory for Pres­i­dent Barack Obama, a big slice of hum­ble pie for House Repub­li­cans and a blow to House Speaker John Boehner, R-Ohio, who’ll have an angry band of tea party law­mak­ers to deal with when Con­gress returns to Wash­ing­ton next month.

Back-to-back voice vote approvals of the two-month spe­cial mea­sure by the Sen­ate and House came in mere sec­onds with no debate, just days after House Repub­li­can lead­ers had insisted that reopen­ing nego­ti­a­tions on a full-year bill was the only way to per­suade them to pre­vent a tax increase on Jan. 1.

Obama imme­di­ately signed the bill into law.

“I said it was crit­i­cal for Con­gress not to go home with­out pre­vent­ing a tax increase on 160 mil­lion work­ing Amer­i­cans and I’m pleased to say that they got it done,” a buoy­ant look­ing Obama said at the White House before dash­ing off for his delayed hol­i­day vaca­tion to his home state of Hawaii.

Actu­ally most law­mak­ers were long gone. A token few showed up to make approval official.

The leg­is­la­tion buys time for talks early next year on how to finance the year-long exten­sions — nego­ti­a­tions that promise to be con­tentious, espe­cially if Democ­rats con­tinue to use Obama’s jobs agenda to seek a polit­i­cal edge in the 2012 pres­i­den­tial and con­gres­sional campaigns.

The mea­sure will keep in place a 2 per­cent­age point cut in the Social Secu­rity pay­roll tax — worth about $20 a week for a typ­i­cal worker mak­ing $50,000 a year — and pre­vent almost 2 mil­lion unem­ployed peo­ple from los­ing job­less ben­e­fits aver­ag­ing $300 a week. Doc­tors will win a reprieve from a 27 per­cent cut in their Medicare pay­ments, the prod­uct of a 1997 cut that Con­gress has been unable to per­ma­nently fix.

Repub­li­cans did claim a major vic­tory, win­ning a pro­vi­sion that would require Obama to make a swift deci­sion on whether to approve con­struc­tion of the Canada-to-Texas Key­stone XL oil pipeline, which could gen­er­ate thou­sands of con­struc­tion jobs. To stop con­struc­tion, Obama, who had wanted to put the deci­sion off until after the 2012 elec­tion, would have to declare it was not in the nation’s interest.

On Fri­day, an expres­sion­less Boehner read from a piece of paper before him, gaveled the House’s last ses­sion of the year closed and stepped off the podium on the Demo­c­ra­tic side.

Boehner had been open to the Senate’s ver­sion of the leg­is­la­tion a week ago, even though it would have punted the issue into Feb­ru­ary and given Democ­rats a proven polit­i­cal issue. But tea party forces and some in his own lead­er­ship revolted, insist­ing on pick­ing a hol­i­day fight with Democ­rats, and Boehner felt no choice but to go along.

The bat­tle turned out to be a loser for House Repub­li­cans, earn­ing the ire of swing vot­ers and many in the GOP estab­lish­ment, but when Boehner capit­u­lated on Thurs­day he then felt the lash from hard-core conservatives.

“Even though there is plenty of evi­dence this is a bad deal for Amer­ica … the House has caved yet again to the pres­i­dent and Sen­ate Democ­rats,” said Rep. Tim Huel­skamp, R-Kan.

Mean­while, Demo­c­ra­tic Sen­ate leader Harry Reid of Nevada did a vic­tory lap, twist­ing the knife into tea party Republicans.

“I hope this Con­gress has had a very good learn­ing expe­ri­ence, espe­cially those who are newer to this body,” Reid said. “Every­thing we do around here does not have to wind up in a fight.”

A full-year exten­sion of the tax cut had been embraced by vir­tu­ally every law­maker in both the House and Sen­ate but had been derailed in a quar­rel over demands by House Repub­li­cans. Sen­ate lead­ers of both par­ties had tried to barter their own year­long agree­ment a week ago but failed, instead agree­ing upon a 60-day mea­sure to buy time for talks next year.

House GOP argu­ments about the leg­isla­tive process and what the “uncer­tainty” of a two-month exten­sion would mean for busi­nesses seemed lame to many peo­ple when com­pared to the con­se­quences of rais­ing taxes and cut­ting off job­less ben­e­fits in the mid­dle of the hol­i­day sea­son, and Obama and the Democ­rats were hard on the offen­sive. House Repub­li­cans finally resorted to a tech­ni­cal fix and the fact that Reid would name nego­tia­tors on the GOP’s year­long mea­sure as rea­sons to reverse course and embrace the Sen­ate measure.

Friday’s House and Sen­ate ses­sions were remark­able. Both cham­bers had essen­tially recessed for the year, but lead­ers in both par­ties orches­trated pas­sage of the short-term agree­ment under debate rules that would allow any indi­vid­ual mem­ber of Con­gress to derail the pact, at least for a time. None did.

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 — and taken a toll on those of con­gres­sional Republicans.

The two-month version’s $33 bil­lion cost will be cov­ered by a 0.1 per­cent­age point increase on guar­an­tee fees on new home loans backed by mort­gage giants Fan­nie Mae, Fred­die Mac and Gin­nie Mae — at a likely cost of about $17 a month for a home­owner with a $200,000 mortgage.

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

Even though GOP lead­ers includ­ing House Major­ity Leader Eric Can­tor, R-Va., promised that the two sides could quickly iron out their dif­fer­ences, the truth is that it will take intense talks to fig­ure out both the spend­ing cuts and fee increases required to finance the longer measure.

Repub­li­cans want to shorten the max­i­mum length of unem­ploy­ment ben­e­fits from 99 to 79 weeks, freeze the pay of fed­eral civil­ian work­ers and make fed­eral work­ers con­tribute more into their pen­sions — all ideas con­sid­ered by the failed debt “super­com­mit­tee” this fall. The main pro­vi­sions of the year­long House mea­sure cost about $200 bil­lion, and the final ver­sion could cost more.

Reid sig­naled a hard line for the House-Senate talks by assign­ing Sen. Ben Cardin, D-Md. — a strong advo­cate for fed­eral work­ers — to the Demo­c­ra­tic nego­ti­at­ing team.

Posted by AP News on Dec 23 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.