December 22, 2011

House G.O.P. Leaders Agree to Extension of Payroll Tax Cut

By JENNIFER STEINHAUER New York TImes

WASHINGTON Bowing under intense pressure from members of their own party, House Republican leaders agreed Thursday to accept a temporary extension of the payroll tax cut, beating a hasty retreat from a showdown that Republicans increasingly saw as a threat to their election opportunities next year. Under a deal reached between House and Senate leaders, the House will now approve as early as Friday the two-month extension of a payroll tax holiday and unemployment benefits approved by the Senate last Saturday, and the Senate will appoint members of a House-Senate conference committee to negotiate legislation to extend both benefits through 2012. House Republicans who rejected an almost identical deal on Tuesday collapsed under the political rubble that has accumulated over the week, much of it from their own party, worried that the blockade would do serious damage to their appeal to voters. The House speaker, John A. Boehner, determined to put the issue behind his party, announced the decision over the phone to members on Thursday, and did not permit the usual back and forth that is common on such calls, enraging many of them. After his conversation with lawmakers, the speaker conceded to reporters that it might not have been politically the smartest thing in the world for House Republicans to put themselves between a tax cut and the 160 million American workers who would benefit from it, and to allow President Obama and Congressional Democrats to seize the momentum on the issue. The agreement ended a partisan fight that threatened to keep Congress and Mr. Obama in town through Christmas and was just the latest of the bitter struggles over fiscal policy involving House conservatives, the president and the Democratic-controlled Senate. Under the deal, the employees share of the Social Security payroll tax will stay at the current level, 4.2 percent of wages, through Feb. 29. In the absence of Congressional action, it would revert to the usual 6.2 percent next month. The government will also continue paying unemployment insurance benefits under current policy through February. Without Congressional action, many of the long-term unemployed would begin losing benefits next month. In addition, under the agreement, Medicare will continue paying doctors at current rates for two months, averting a 27 percent cut that would otherwise occur on Jan. 1. The new deal makes minor adjustments to make it easier for small businesses to cope with the tax changes and prevents manipulation of an employees pay should the tax cut extension fail to go beyond two months. The House, which is in pro forma session, could seal the deal Friday unless a member raises an objection

on the floor; the Senate would then do the same. If an objection occurs, Mr. Boehner will summon the full House back next week for a formal vote, he said. Mr. Obama, who has reaped political benefits from the standoff, welcomed the outcome. This is good news, just in time for the holidays, he said in a statement. This is the right thing to do to strengthen our families, grow our economy, and create new jobs. This is real money that will make a real difference in peoples lives. In the end, the agreement seemed a clear victory for Mr. Obama and the Democrats at least for now. They managed to change the narrative from one about Mr. Obama making a concession he agreed to a provision in the bill to speed the approval process for an oil pipeline to one about stonewalling House Republicans, who have spent much of the year holding the upper hand of divided government. Democrats have been quick to exploit the issue. The Democratic Congressional Campaign Committee this week unleashed automated phone calls, some of which were recorded by the Democratic strategist James Carville, in the districts of 20 targeted House Republicans. The onslaught will continue. This is a defining moment, said the head of the committee, Representative Steve Israel, Democrat of New York. This by itself doesnt necessarily alter the political landscape, but the chronic chaos and repeated extremism will help us win back the House. The push to find a quick resolution was touched off Thursday by Senator Mitch McConnell of Kentucky, the Republican leader, who had negotiated the two-month extension. After a few days of silence, he called on the House to accept a temporary continuation of the tax cut, and to extend unemployment pay, as long as Senate Democrats committed to quickly opening negotiations over a yearlong agreement. House Republicans sensibly want greater certainty about the duration of these provisions, while Senate Democrats want more time to negotiate the terms, Mr. McConnell said in a prepared statement. We can and should do both. Editorial boards from Bakersfield, Calif., to Chicago to St. Petersburg, Fla., hammered on Republicans throughout the week, and even the conservative editorial page of The Wall Street Journal piled on, setting off near panic among Republicans as they came under attack for potentially cutting the take-home pay of American workers in a struggling economy. Just hours after Mr. McConnell released his statement Thursday, a few House freshmen began to crumble. Im calling on G.O.P. leadership to immediately bring up the Senates two-month extension for an up or down vote, said Representative Sean P. Duffy of Wisconsin, who voted against the deal earlier in the week. On the Web site of Representative Rick Crawford, Republican of Arkansas, were two statements: one from Tuesday proclaiming his vote against the Senate payroll tax bill, and a new message on Thursday featuring a letter he wrote to Mr. Boehner. We are now in a position that requires all options to be on the table, that requires Republicans to not only demand a willingness to compromise, but to offer it as well, Mr. Crawford wrote. Mr. McConnells statement was a lifeline of sorts to House Republicans out of a conflict that many acknowledged had the capacity to harm their party in the opening days of an election year in which a president will be chosen and control of the divided Congress decided. Many Senate Republicans and other

party insiders expressed deepening worry that the fight was whittling away at their chance to take back the Senate, remove Mr. Obama and even hold their majority in the House. Soon after the McConnell statement was released, Mr. Boehner met with Representative Eric Cantor of Virginia, the majority leader, and the eight negotiators he appointed to serve on a conference committee, telling them of his decision, according to Republican aides. His staff then presented a proposal to Senator Harry Reid, Democrat of Nevada. The agreement is likely to be only a truce in the battle. I look forward to appointing members of my caucus to continue negotiations towards a year-long agreement, Mr. Reid said in a statement. Two months is not a long time, and I expect the negotiators to work expeditiously to forge yearlong extensions of these critical policies. Robert Pear contributed reporting. This article has been revised to reflect the following correction: Correction: December 22, 2011 Because of an editing error, an earlier version of this article misstated the amount of the average tax break for a family making $50,000 a year. The break amounts to $40 each paycheck; not $40 a week.