House GOP relents on payroll tax cut deal
Washington (CNN) -- Speaker John Boehner on Thursday
accepted a two-month extension of the payroll tax cut, succumbing to
mounting pressure from the White House, congressional Democrats and
fellow Republicans to reverse his House leadership's opposition to the
Senate-passed proposal.
President Barack Obama immediately congratulated congressional
leaders on the deal, while Senate Republican leader Mitch McConnell --
who increased the pressure on Boehner earlier in the day with a call for
such an agreement -- said it was a "sigh of relief" for American
taxpayers.
Under the deal, the payroll tax assessed American workers will remain
at the current 4.2% rate instead of reverting to the 6.2% rate before
the cut enacted last year. Without congressional action, the higher rate
would have returned on January 1, meaning an average $1,000 tax
increase for 160 million Americans.
The deal also includes the addition of legislative language to ease
the administrative burden on small businesses implementing the plan, and
a commitment to negotiations on a one-year extension of the payroll tax
cut as well as other benefits, according to statements by congressional
leaders and Obama.
"We will ask the House and Senate to approve this agreement by
unanimous consent before Christmas," Boehner said, indicating the
chambers could pass the plan without objection so that members don't
have to return to Washington from their holiday recess.
However, it was unclear if his Republican caucus would accept the
agreement without objection. A GOP uprising during a caucus conference
call Saturday had caused Boehner to reject the plan the Senate passed
last week with strong bipartisan support, setting up this week's
political showdown in the final days before the payroll tax cut expired.
According to GOP sources, another conference call Thursday involved
Boehner describing the terms of the agreement without allowing any
members to ask questions or raise objections. One Republican House
member on the call described Boehner "tired and ticked off."
Boehner, R-Ohio, then announced the deal to reporters, calling the
House GOP's prior opposition to the Senate plan the right thing to do,
even if politically questionable.
"It may not have been politically the smartest thing in the world,"
Boehner said, but the end result was "we were able to fix what came out
of the Senate."
The speaker also acknowledged the pressure he was under, saying: "I
talked to enough members over the last 24 hours who say we don't like
the two-month extension and if you can get this fixed, why not do the
right thing for the American people even if it's not exactly what we
want."
Analysts said Boehner had little choice but to back down.
"It became increasingly obvious he had to fold," said CNN Senior
Political Analyst David Gergen, using poker terminology. Boehner was
under "intense pressure from senior Republicans" over a situation that
"became so botched," Gergen said.
Darrell West , the vice president and director of governance studies
at the Brookings Institution, said the the issue has worked in the favor
of Democrats because they had Republicans "seemingly willing to accept a
tax increase" by opposing the Senate extension of the payroll tax cut.
"Any time you can get the other party in opposition to its own stated principles, that's a good thing," West said.
The ongoing impasse pitting the House Republican leadership against
the White House, congressional Democrats and fellow Republicans was the
kind of political gamesmanship that Americans dislike about Congress,
Obama said earlier Thursday.
The two-month Senate compromise was passed last Saturday by an 89-10
vote, with strong Republican support, after Senate negotiators were
unable to agree on a one-year extension.
Boehner instead demanded negotiations on a one-year extension,
arguing that anything shorter would simply prolong the issue and causes
uncertainty for American taxpayers and businesses.
His stance drew sharp criticism this week, including an editorial in
the conservative Wall Street Journal that said House Republicans had
lost the political advantage of advocating tax cuts to Obama and the
Democrats.
On Thursday, McConnell's words and calls by other conservative
Republicans for the House to accept a short-term extension showed the
tide turning against Boehner and his GOP leaders.
In addition to urging for House approval, McConnell pushed Senate
Majority Leader Harry Reid, D-Nevada, to appoint conferees to a
House-Senate conference committee to iron out differences over a
one-year extension -- something requested by House Republicans.
"House Republicans sensibly want greater certainty about the duration
of these provisions, while Senate Democrats want more time to negotiate
the terms," McConnell said in a written statement. "These goals are not
mutually exclusive. We can and should do both."
McConnell and Reid spoke later Thursday, according to a Senate source.
Meanwhile, conservative Sen. Mike Johanns, R-Nebraska, and Rep. Sean
Duffy, R-Wisconsin, added their voices to GOP calls for House
Republicans to relent in their standoff.
"Leader McConnell was right to ask Senator Reid to appoint conferees,
and the House should pass the Senate compromise while we continue
searching for a resolution by February," Johanns said in a statement,
while Duffy said he would support anything to avoid a January 1 tax
hike.
"While I would prefer a year-long tax holiday, I refuse to let anyone
play games with my constituents who stand to face a significant tax
hike if we don't act," Duffy said in a statement. "That's why I will
support any option to extend the payroll tax cut."
Boehner continued to reject the calls for the House to approve the
Senate plan, telling reporters Thursday morning that "we can do better."
"It's time for us to sit down and have a serious negotiation and solve this problem," he said .
Obama reiterated the Democratic position in a phone call with Boehner
Thursday morning, stating that the House should pass the Senate's
two-month extension and then negotiators should get to work on a
longer-term deal.
The president also met with a group of middle-class Americans as part
of a White House attempt to illustrate the impact on 160 million
American workers if the tax holiday ends December 31. The typical
worker's take home salary will shrink by about $40 per pay period
without the tax cut, or $1,000 annually.
"It's time for the House to listen ... to the voices all across the
country and reconsider," Obama said. "I am ready to sign that (Senate)
compromise into law the second it lands on my desk."
Obama blamed the impasse on "a faction of House Republicans" that
refused to support the Senate compromise, even though leaders of both
parties had insisted they wanted to extend the payroll tax cut.
He prompted laughter by adding: "Has this place become so
dysfunctional that even when people agree to things we can't do it? It
doesn't make any sense."
Reid, reinforcing Obama's stance, released a statement promising that
he will be "happy to restart the negotiating process to forge a
year-long extension" as soon as the House passes the Senate's compromise
plan.
Many in the GOP fear the issue is damaging the party's anti-tax reputation heading into the 2012 campaign.
Pushed by his conservative, tea party-infused House GOP caucus,
Boehner had continued to insist that anything short of an immediate
12-month extension of the tax holiday would only create more economic
instability and do little to generate job growth.
Also at stake: extended emergency federal unemployment benefits and
the so-called "doc fix," a delay in scheduled pay cuts to Medicare
physicians.
Both of those measures, along with the tax holiday, were currently scheduled to expire in nine days.
All top Democrats and Republicans publicly agreed on the need for a
one-year extension, but critics of the House GOP's stance insisted that
the Senate's two-month extension was necessary to give negotiators more
time to hammer out a deal over how to pay for the continuation.
They accused House Republicans of creating the very instability they
had railed against, and of needlessly creating yet another congressional
crisis at the end of a year filled with Capitol Hill showdowns.
Sen. John McCain of Arizona, the GOP's 2008 presidential nominee,
strongly criticized the House GOP's stance on CNN's "American Morning"
Thursday.
"The Republicans are losing this fight. We need to get back on
track," McCain said. "A thousand dollars a year is a big amount of money
to most Americans, and I think it's very important. ... I worry about
the fact that we are continuing to increase the debt and the deficit,
but now it's become very symbolic, and I think it has to be done."
A Wall Street Journal editorial Wednesday blasted Boehner and his
House GOP colleagues, arguing that they had "achieved the small miracle
of letting Mr. Obama position himself as an election-year tax cutter."
"At this stage, Republicans would do best to cut their losses and
find a way to extend the payroll holiday quickly," the paper's editorial
writers said.
A Senate GOP leadership aide told CNN Wednesday that House Republicans had "painted themselves into a corner."
"This is a lose-lose situation for us. (House Republicans) let the
Democrats get the messaging advantage and, more specifically, we've
turned one of our key issues on its head," the aide said. "The
Republicans look like they are the ones blocking tax relief."
"When you are arguing process, you are losing, by definition," the
aide added. "We are arguing process while they've got politics on their
side."
Despite mounting pressure on House Republicans to give in and pass
the $33 billion Senate bill, a well-placed House GOP source had
indicated Wednesday that his side would not consider an end-game to the
standoff until next week, just days before the December 31 deadline.
Numerous Senate Republicans have indicated they felt politically
undercut by their House colleagues after agreeing to the two-month
compromise negotiated by McConnell and Reid.
The House GOP caucus, however, revolted against that blueprint,
calling it an inadequate patchwork plan. On Tuesday, the House voted
229-193 on a virtual party-line basis to express its disagreement with
the Senate bill and call for the creation of a House-Senate conference
committee to resolve the matter -- something previously ruled out by
Reid.
The House also approved a separate resolution supporting a year-long
extension of both the payroll tax cut and emergency unemployment
benefits, along with a new, two-year doc fix.
Further complicating matters was the fact that the Senate had
adjourned for the year. Most House members also left Washington after
Tuesday's vote.
A number of Republicans have said the party should have declared
victory after winning an agreement by Obama -- as part of the payroll
tax cut package -- to make a decision within the next 60 days on whether
to proceed with the proposed Keystone XL oil pipeline from Canada to
the Gulf of Mexico. Republicans and some Democratic union leaders say
the controversial pipeline will create thousands of new jobs; critics
question its environmental impact.
A failure to act could have had major political fallout. Numerous
observers believe Obama is preparing to parrot Harry Truman's 1948
campaign next year by running against an unpopular, dysfunctional
Congress controlled partly by the GOP.
www.cnn.com/2011/12/22/politics/congress-payroll-tax-cut/index.html
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