Facing withering criticism from across the political spectrum and abandoned by Senate allies, House Republicans bowed to political reality Thursday and agreed to a two-month extension of a payroll tax cut for 160 million Americans.
The agreement represented a remarkable capitulation on the part of House Republicans, who had two days earlier rejected such a deal with Democrats as the kind of half-measure that their new majority was elected to thwart.
And it amounts to a Christmas gift for President Obama, who attempted to paint his Republican opponents as willing to raise taxes for millions of Americans. Such an image could have cost the party politically just as it is gearing up to try to take back the White House and the Senate in 2012.
The agreement resolved the last stalemate in a year of bitter congressional fighting that earned lawmakers their lowest approval ratings in recent memory.
In exchange for supporting the 60-day patch, Republicans secured minor face-saving concessions from Senate leaders, who had already passed a two-month dealon an overwhelming vote of 89 to 10. Senate leaders had balked at the House’s demand to restart talks over the holidays on a full-year extension of the tax cut.
The Senate agreed to make a technical change to the payroll tax reporting requirements, designed to lessen the burden on small businesses of implementing the two-month deal.
And Senate Majority Leader Harry M. Reid (D-Nev.) promised he would appoint a conference committee to take up negotiations after New Year’s Day on ways to pay for a full-year tax cut.
Reid and Obama have been pushing for a full-year tax relief package for weeks. Republicans, on the other hand, have been divided over whether a payroll tax holiday is a good way to stimulate the economy.
Congressional leaders said they expected to ratify the deal in voice votes on Friday that will require only a handful of members to be in Washington.
Under the agreement, benefits for the long-term unemployed will also be extended for two months and scheduled cuts in reimbursements to doctors who serve Medicare patients will be postponed. The $33 billion package will be funded by increasing the fees that Fannie Mae and Freddie Mac charge lenders for guaranteeing home loans.
Obama had insisted the Senate’s two-month deal was the only way to prevent payroll taxes from leaping from 4.2 percent to 6.2 percent next month for 160 million workers. He had secured the original, year-long break in the payroll tax last December and argued that the extension was necessary to boost the economy.
“This is good news, just in time for the holidays,” the president said in a statement Thursday evening. “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 people’s lives. ”
He credited public pressure — which was fanned by the White House — with changing the House’s position.
Boehner said he was convinced by fellow House members that although a short-term deal was not ideal, they should support it if they could get the change to the payroll tax reporting requirements.
Washington Post
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