In a stunning reversal, House Speaker John Boehner late Thursday abandoned a bid to force Senate Democrats to the bargaining table to resolve an impasse over the expiring payroll tax cut – a strategy that had risked tax hike for some 160 million American workers.
In the end, carrying on the fight was a losing proposition for a party that took back the House in 2011 on a pledge never to raise taxes. And – in a new development – Democrats learned to say, "No."
The deal marks a capitulation by the speaker, who appeared at the podium alone to announce the agreement, worked out with Senate majority leader Harry Reid (D) of Nevada and endorsed by President Obama.
It also marks a breakthrough for Senate Democrats and Mr. Obama, who said "no" from the start of this impasse – and stuck with it.
As a result, near empty chambers in the House and Senate on Friday will pass by unanimous consent a slightly modified version of a Senate bill that extends by two months the payroll-tax cut and other expiring measures, congressional leaders hope.
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If the bill passes Friday, Obama will sign it before joining his family for vacation in Hawaii. If any member objects, the next step would be to call the full House or Senate back into session next week, when the measure is all but certain to pass.
This agreement means that the payroll tax cut, worth about $40 on the average paycheck, will remain in effect through February. Federal jobless benefits up to 99 weeks will also continue, and a proposed 27.4 percent payment cut for physicians serving Medicare patients will not take place on Jan. 1.
For five days, House Republicans struggled for traction to get the Senate to the negotiating table to take up the House version of that bill, which extended expiring provisions for a full year, and the so-called “doc fix” by two years. But by midweek, they found themselves isolated and fighting alone.
In contrast with previous standoffs, this time the White House and Senate majority leader Harry Reid didn’t budge or even blink.
When Speaker Boehner on Thursday renewed calls for the Senate to appoint conferees to work out a one-year bill, Senator Reid declined. “Once the House passes the Senate’s bipartisan compromise to hold middle-class families harmless while we work out our differences, I will be happy to restart the negotiating process to forge a year-long extension,” Reid said.
When Boehner rang up Obama, requesting that he send advisers to Capitol Hill to discuss flaws in the Senate plan, the president declined. “Enough is enough,” he said at a rally with Americans concerned about a payroll tax hike. “The people standing with me today can’t afford any more games.”
“The House needs to pass a short-term version of this compromise, and then we should negotiate an agreement as quickly as possible to extend the payroll-tax cut and unemployment insurance for the rest of 2012,” he added.
In a final blow, Senate Republican leader Mitch McConnell on Thursday broke silence to urge Republicans to accept the Senate plan and for Democrats to name negotiators to an eventual conference over a one-year extension. That proposal became, in effect, the compromise that broke the impasse.
Up until this week, House Republicans, backed by a strong freshmen class stared down Senate Democrats and the Obama White House in one clash after another. With the new GOP House majority, the conversation on Capitol Hill shifted from stimulus spending to deficit cutting, from new green energy to fossil fuels. Deficit was cutting in. Tax hikes, including for the highest income taxpayers, was out.
The president tried to compromise with the new majority and Senate Democrats capitulated, dismaying elements of the Democratic base. Republicans won every encounter.
- House Republicans threatened to shut down the government over unfinished spending bills for fiscal year 2011 – a standoff that was settled after Democrats agreed to billions in spending cuts.
- Boehner announced a new rule for raising the national debt limit – that any hike in the debt ceiling must be accompanied by at least equal spending cuts – and took the nation to the brink of a first-ever default on the national debt to hold that line. Negotiations between Boehner and Obama broke down after GOP conservatives rebelled at reports that the Speaker had agreed to $800 billion in revenue hikes.
- Until now, House Republicans had stopped the Democratic agenda cold. Obama’s fiscal year 2012 budget and jobs program were blocked in the House, and his legacy from the last Congress – health-care and Wall Street reforms – placed under permanent siege.
But by late August, Democrats were weary of appearing rolled the by the tea-party wing of the House Republican caucus – and heartened by signs that the public mood was turning against them.
The debt-ceiling debacle, which produced the first-ever downgrade of the US credit rating, battered the reputation of Congress, now at record low levels. It also battered public perception of the tea-party movement and of House Republicans, who were especially blamed for the brinkmanship in Congress.
After the debt-ceiling crisis in August, “We saw a big drop in several measures,” he adds. “Economic confidence dropped nearly 20 points. Faith in Congress is so low now it’s discouraging in a democracy.” In a survey of the perceived honesty of various professions, Congress ranked dead last with lobbyists and car salesmen.
Boehner appeared to recognize that shift in public mood. In a two-hour conference call on Saturday, Boehner called the Senate bill to extend expiring measures a victory. But conservatives strongly objected. They called on Boehner to reject the Senate’s two-month extension and hold the line for the one-year House extension, including approval of the Keystone XL pipeline and a reduction of unemployment benefits from 99 to 59 weeks.
The House on Tuesday voted, 229 to 193, to reject the Senate bill and hold out for a new negotiation with the Senate over a one-year extension. But this time, Senate Democrats had resolved not to cave.
“Republicans and Democrats already negotiated an agreement and there is no time and no need to haggle over this any further,” says Sen. Charles Schumer (D) of New York in a conference call with reporters on Wednesday.
Even the editorial board of conservative-leaning The Wall Street Journal turned against them, dubbing GOP strategy over the expiring payroll-tax cuts “a fiasco.” Provoking a crisis over an expiring tax cut affecting 160 million Americans was a tough sell. Most Americans supported extending the payroll-tax cut. By rejecting a Senate bill to extend those cuts, House Republicans, for the first time, appeared to be on the side of a tax hike.
Democrats saw the payroll tax clash as an opportunity to end a disappointing year on offense."It was opportunistic," says analyst Mr. Collender. “Shortly after the debt-ceiling fight in August was the point at which 'no' for Democrats started to be an acceptable answer."
Until that point, Democrats were “reflecting the president,” he adds. “The president was trying to compromise, but each time they found that House Republicans kept raising the bar, and they were getting hurt with their base by appearing to be weak.”
But with the sharp turn in public-approval ratings after the debt-ceiling debacle, Democrats grew bolder in opposition and, in the end, left House GOP leaders no place to go but over a cliff.
“Support for Congress in general is close to its lowest point ever. Republicans are generally getting blamed for that, and support for the tea party is at its lowest point since the 2010 election. Put that together, and what’s the down side for Democrats in taking a strong position?” Collender adds.