Payroll tax cut extension OK’d

House Republicans back down in face of intense criticism

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Updated: December 22, 2011, 9:27 PM

 

WASHINGTON — 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. Senate leaders had insisted on the two-month extension to buy time for talks next year.

Local angle

U.S. Rep. Jaime Herrera Beutler, R-Camas, plans to vote for the two-month extension of the payroll tax cut.

“Jaime has consistently said she will support a plan that continues the payroll tax cuts, ensures Medicare patients can keep seeing their doctors and provides a responsible unemployment insurance extension,” Casey Bowman, the congresswoman’s spokesman, said Thursday. “It appears this plan does those things and provides a fix that makes processing the tax cuts simpler for employers.”

During a prolonged stalemate over the measure, Herrera Beutler was one of just seven House Republicans who voted Tuesday to consider the extension while the rest of the GOP majority dug in its heels. She has expressed disappointment that the extension was not for a year.

Sen. Patty Murray, D-Wash., who voted for the measure in the Senate earlier this month, said in a statement she was pleased that Republicans had ended their “hold-out.”

“This bipartisan agreement will help give anxious Washington state families a measure of economic security through the holiday season,” she said. “It will also allow us to continue working toward what Democrats have been fighting for all along: a yearlong extension of these critical middle-class supports.”

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. House GOP arguments about the legislative process and the “uncertainty” a two-month extension would mean for business were unpersuasive.

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

The compromise legislation would renew the tax break through Feb. 29, along with jobless benefits and a “fix” to prevent doctors from absorbing a big cut in Medicare payments. Its $33 billion cost would be covered by an increased fee on mortgages backed by Fannie Mae and Freddie Mac.

 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.

“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 on the yearlong measure passed by the House, which contains curbs to unemployment insurance and other ideas backed by conservatives — as well as deeper spending cuts to pay for the full-year cost.

After Senate leaders tried but failed to match the House’s goal for a full-year pact, the chamber on Saturday instead gave sweeping approval for the two-month extension of 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.