Democrats' tough choice: shut down government or swallow GOP's bills

GOP-led House has approved a payroll tax cut for workers in 2012 and is poised to vote on an omnibus spending bill for this fiscal year. Democrats want changes to both, but they appear to have lost much leverage. 

By , Staff writer

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    Following the Democrats' weekly strategy session, Senate Majority Leader Harry Reid of Nev., pauses during a news conference on Capitol Hill in Washington, Tuesday, Dec. 13.
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As Washington braces for a possible government shutdown, House Republicans are racing toward a Friday vote on a $1 trillion omnibus spending bill. But make no mistake: This is political hardball, fast and furious.

 The 1,219-page bill, if also approved by the Senate and signed by President Obama, would avert a government shutdown after Friday, when a stop-gap measure for fiscal year 2012 spending, which began Oct. 1, runs out.

The snap vote also gives House Republicans a way out of town, leaving a gridlocked Senate and a president facing reelection in 11 months to accept this spending bill – and its controversial policy riders – or to shut out the lights.

Recommended: Why 'temporary' tax cuts never die: Payroll tax and 3 other examples

 Winning a spending vote on Friday would also give House Republicans more leverage in negotiations with the Senate over extending a payroll tax cut that would benefit 160 million workers. The GOP-led House on Tuesday passed a bill that Senate majority leader Harry Reid (D) has declared “dead on arrival” in the Senate – and that Mr. Obama has already pledged to veto. Democrats don't like how the bill would pay for extending the payroll tax cut through 2012, nor an oil pipeline project attached to the legislation.

Here's the advantage to the GOP strategy: Once House members leave Washington for recess, and hence are not available for future votes, the heat is on the Senate to accept the House version of the fiscal 2012 omnibus spending bill. A darkened House also leaves the Senate with no option for extending the Social Security payroll tax cuts but to approve the House-passed version, which blocks key environmental regulations, forces an early decision on an oil pipeline that the White House had put off, and avoids raising taxes on the highest-income Americans.

The White House says Congress should pass another stop-gap measure, as it has seven times already this year.

“The president continues to have significant concerns about a number of provisions that have been reported to be in the Republican agreement on the omnibus,” said White House communications director Dan Pfeiffer, in a Dec. 14 statement. These include provisions that would undercut Wall Street reforms and environmental protections, as well as the president’s foreign policy prerogatives, he added.

 The omnibus spending bill completes work on the nine remaining annual appropriations bills, including Pentagon spending as well as controversial Labor-Health and Interior-environment bills.

It’s not clear that House GOP leaders can muster the votes in their own caucus to pass the giant spending bill. On Nov. 17, 101 House Republicans broke with GOP leaders to oppose a package of three fiscal 2012 spending bills, forcing GOP leaders to pass them with Democratic votes. These conservatives, mainly members of the Republican Study Committee, said the bills included too much spending.

The final omnibus spending bill includes even more spending, as well as controversial policy riders.

“We’ve barely seen the bill,” says Rep. Jeff Flake (R) of Arizona. “It’s an awful big bill to get a vote on that fast.” 

“Some riders got in, some got knocked out, and I don’t even know – and I’m on the appropriations committee,” he adds. “Whenever we come to an impasse, our leadership says, we can’t shut the government down. We haven’t had the leverage in any negotiation we’ve gone into. That’s what’s frustrating to me.”

Senate Democrats, unable to move their own version of a payroll tax extension after two votes this year, also need lawmakers from the other side of the aisle to move legislation. For months, they have demanded more sacrifice from the top 1 percent of taxpayers – a keystone of their legislative and 2012 campaign strategy. 

 Senate Democrats have proposed paying for extending the payroll tax cuts with a 3.25 percent surtax on income above $1 million a year. By opposing this tax hike, Republicans were on “seemingly indefensible ground,” said Senate majority leader Harry Reid, in a floor speech setting up the issue on Nov. 30.

“A bill that will cut taxes for 92 percent of American families and every single business in the nation without addition a penny to the deficit may not get a single Republican vote because it would cost a few incredibly prosperous Americans two weeks pay,” he said at the time.

(In fact, Senate Democrats' version of a payroll tax extension did win one GOP vote on Dec. 1, from Sen. Susan Collins (R) of Maine, but fell short of the 60 votes needed to advance to the Senate floor.)

Most Americans want millionaires to pay higher taxes, polls show. Nearly 6 in 10 Americans say they want an extension of the payroll tax cut, which fell from 6.2 percent to 4.2 percent in 2011 tax “holiday,” according to a new Associated Press-GfK poll. 

But after the House GOP blitz to pass its own version of a payroll tax extension and, now, an omnibus spending bill, Democrats have lost much of their leverage. By late Wednesday, Democrats were saying privately that the surtax on millionaires may have to be dropped.

“We are willing to negotiate the millionaires' surtax to see a resolution to the payroll tax,” said a senior Democratic aide on Thursday. “If negotiation means dropping the millionaires' surtax in exchange for dropping the Keystone [oil] pipeline, we’re willing to have that conversation.”

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