Politics & Government

House GOP leaders capitulate, agree to 2-month tax-cut extension

WASHINGTON — House Republican leaders reversed themselves Thursday and agreed to a temporary two-month extension of a payroll tax break — after a week of pummeling from President Barack Obama and even some of their conservative allies.

The retreat, which should spare 160 million Americans from suffering an $80 per month payroll tax hike starting Jan. 1, is a major win for Obama, who postponed a Christmas holiday in Hawaii to stay in Washington and pressure the House into taking the compromise.

The House GOP surrender came after a week of White House pressure and mounting criticism of House Republicans from GOP-friendly allies, including the Wall Street Journal editorial board, which likened the House leadership's opposition to extending a popular tax break to a "circular firing squad."

Obama, in a statement called it "good news, just in time for the holidays. ... I've stated consistently that it was critical that Congress not go home without preventing a tax increase on 160 million working Americans. Today, I congratulate members of Congress for ending the partisan stalemate by reaching an agreement that meets that test."

House Speaker John Boehner, R-Ohio, who stunned Washington on Sunday by rejecting a compromise that had cleared the Senate Saturday by a vote of 89-10 — with 39 Republicans voting for approval — said Thursday evening that his members had wanted a full-year tax cut to give businesses some certainty in a turbulent economy, but he finally agreed to the two-month compromise, along with a minor accounting fix.

"We were here fighting for the right things," Boehner said. "It may not have been politically the smartest thing in the world, but ... we have fought the good fight."

Boehner plans to bring the Senate bill — with the fix — to the House floor Friday for a voice vote by unanimous consent. If no member objects — and few lawmakers remain in Washington — the measure will go to the Senate, where Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., welcomed the deal.

But the measure could be derailed in the House, at least temporarily, if even a single member objects.

Asked whether he had unanimous support for the deal, Boehner said: "I don't know that." House members elected in 2012 with tea party support had vociferously opposed the measure.

Boehner said he'd call House members back to Washington next week if the compromise is scuttled Friday.

And he noted that the deal does include forcing the White House to make a decision on the controversial Keystone pipeline, which the White House opposed.

The White House had mounted a public relations blitz to get the tax break extended, with a countdown clock in the briefing room and an appeal on Twittter asking Americans to share what $40 buys, the estimated average per-paycheck hike if the tax break expires.

Obama earlier Thursday appeared on stage with a group of ordinary Americans at an event near the White House, pressing House Republicans to break the deadlock.

"Enough is enough," Obama said. "The people standing with me today can't afford any more games. They can't afford to lose $1,000 because of some ridiculous Washington standoff."

He called on the House to take up the two-month extension and work out an agreement for a full year, noting that McConnell had suggested the same move.

McConnell suggested that Obama's carping at House Republicans was counterproductive and said that the tax wouldn't be a factor if Obama had better managed the economy.

"The president's statements castigating House Republicans have thus amounted to the kind of unhelpful political opportunism Americans are tired of," McConnell said. "The president seems to forget that the only reason we are even discussing an extension of temporary measures like the payroll tax cut and unemployment insurance is his own failure to turn our nation's economy around nearly three years into his administration."

Still, the dispute gave Obama an opportunity to portray himself as a defender of the middle class, and he took full advantage, reading some of the 30,000 responses the White House got on the tax break.

"Joseph from New Jersey talked about how he would have to sacrifice the occasional pizza night with his daughters," Obama said. "He said — and I'm quoting — 'My 16-year-old twins will be out of the house soon. I'll miss this.'"

Obama portrayed the weeklong stalemate as the latest example of what Americans loathe about politics, noting that House Republicans said they wanted a one-year extension of the tax break, which is what Obama proposed as part of his job creation package in September.

"Has this place become so dysfunctional that even when people agree to things we can't do it?" he said to applause.

Across town before they caved, House Republican leaders held a media event of their own, with House Majority Leader Eric Cantor, R-Va., urging Obama to come to the Capitol and negotiate — along with his dog, Bo, who went Christmas shopping with Obama on Wednesday.

"We're pet friendly," Cantor quipped.

But even then dissent was mounting. The Wausua Daily Herald in Wisconsin reported a key defection: freshman Republican Rep. Sean Duffy, who broke ranks, saying in a statement that he wanted party leaders to bring the Senate measure to a House vote.

If nothing is done by Jan. 1, employees will pay a 6.2 percent Social Security tax on their pay, 2 points higher than the current rate. In addition, Medicare payments to doctors will drop 27.4 percent and jobless workers will be unable to get up to 99 weeks of unemployment benefits.

The White House says the payroll tax deal works out to about $40 a paycheck, or $1,000 a year.

The tax break deal, which includes an extension of benefits for the long-term jobless and a continuation of current Medicare payments to physicians, is expected to cost about $33 billion over 10 years. It will be funded by increases in lending fees charged by mortgage giants Fannie Mae and Freddie Mac.

The agreement came after a day of wrangling, even as many Americans went about their Christmas preparations. Boehner called Obama earlier in the day, asking him to send his economic policy team to up to the Capitol to negotiate.

Obama refused, telling Boehner that the "only viable option" remained the Senate version.

It was McConnell, who last week helped negotiate the Senate compromise, who offered what ended up as the exit for House Republicans: He pressed them to accept the Senate version, while negotiations on a one-year extension get started.

Analysts viewed the week as an undisputed win for Obama.

"When you consider the Republican Party is famous for being on message, being for tax cuts and Democrats are notorious for being all over the place, it's clear the Republicans in the House have handed Obama a major Christmas present," said Jim Aune, a professor of communications at Texas A&M University. "This was his week."


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