Before Christmas deal

WASHINGTON-Congress approved a two-month tax cut extension for 160 million workers Friday, after House Republicans capitulated on their insistence of an immediate yearlong extension to the payroll tax break.

In a year stuffed with fierce Capitol Hill fights, 2011's final congressional war threatens to leave potentially long-lasting battle scars on Republicans heading into the 2012 election.

House Republicans threw down what could be their riskiest gauntlet yet earlier this week when they rejected the Senate's plan for the temporary extension of the expiring cuts to Social Security taxes (see "No to 'can-kicking," Dec. 20). But after enduring days of scathing attacks from other conservatives, House Republicans scrambled to avoid blame for the 2 percent increase in payroll taxes slated to occur Jan. 1.

With both the House and Senate already adjourned for the holidays, Friday's deal came with rare voice votes that lasted mere seconds in House and Senate chambers that were both nearly empty.

There was no formal debate. But the informal debate had been going on all week.

"It may not have been politically the smartest thing in the world," House Speaker John Boehner said of the House GOP stand. "But let me tell you what, I think our members waged a good fight."

President Obama signed the bill Friday afternoon.

The House Republican gambit began after the Senate displayed rare bipartisanship on Dec. 17. Senators voted 89 to 10 for a temporary extension before payroll taxes increased from 4.2 percent to 6.2 percent, which averages to about $80 a month for someone earning a $50,000 annual salary.

The deal included a conservative win that has been lost in the week's political infighting: a provision giving President Obama a 60-day deadline to approve construction of the Keystone oil pipeline. If Obama declines to green light the Canada to Texas pipeline he will have to certify that it is not in the nation's best interest-a risky proposition heading into next November's election.

Senate Republican Leader Mitch McConnell, known as a poker-faced negotiator, offered a high five to a colleague in celebration of last Saturday's brokered deal.

But House Republicans balked, instead pressuring senators to approve a yearlong extension of the tax break. This gamble put a paycheck decrease for Americans, predicted to average about $1,000 annually per household, in the middle of a congressional game of chicken.

"A two-month extension is nothing more than kicking the can down the road," Boehner argued on Tuesday. "All we're asking for is to get the Senate members over here to work with us to resolve our differences so we can do what everybody wants to."

House Republicans said the Senate's short-term extension would offer little stability, dump burdensome accounting changes on businesses, and force lawmakers to revisit the issue in two months. Many conservatives called these arguments sound. But they did not register in the public arena.

The Wall Street Journal's editorial board led the conservative backlash. "We wonder if [Republicans] might end up reelecting the president before the 2012 campaign even begins in earnest," stated the paper's editorial, which used words like "fiasco," "thoroughly botched," and "circular firing squad" to describe Republican efforts. "Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter."

Senate Republicans also piled on, frustrated that the House GOP had ceded ground on the party's signature tax relief platform. Sen. Bob Corker, R- Tenn., called it "one more public policy blunder," while Sen. Scott Brown, R-Mass., said the House action "angers me." Both senators are up for reelection this fall.

The Senate adjourned for the holidays after their Saturday votes. With no Senate sessions scheduled until Jan. 23 and a bipartisan vote for tax cuts already secured, Senate Majority Leader Harry Reid declined to call the Senate back to renegotiate with the House.

"As the Senate vote made clear, there is no reason for this to be a partisan issue," Reid said in a letter to Boehner, alluding to the 39 Republicans who backed the Senate extension. This left House Republicans alone on Capitol Hill with the tricky task of explaining to voters why GOP lawmakers rejected a tax holiday they said they supported.

Still, as late as Thursday morning, House Republicans remained entrenched.

"I don't care about my reelection," said Rep. Tom Reed, a freshmen Republican from New York. "We are going to do what is right for America."

The retreat began Thursday afternoon after McConnell publicly urged his Republican colleagues in the House to accept the Senate's compromise.

Boehner on a brief Thursday afternoon conference call told House Republicans that the time had come to approve the temporary extension.

The agreement immediately sets up a committee of lawmakers to start negotiating a yearlong extension of the payroll tax holiday. It also extends jobless benefits to the long-term unemployed and prevents a scheduled 27 percent cut in Medicare payments to doctors.

"Everything we do around here does not have to wind up in a fight," said Reid.

Democrats will work hard in the coming months to exploit this episode on the campaign trail. Obama, who has enjoyed a recent uptick in his approval ratings, already has grafted the payroll tax fight into his campaign narrative of an obstructionist, do-nothing Congress. At an event Thursday afternoon, people who had written the White House to describe what it would be like to lose the 2 percent tax break joined Obama on stage.

"What's happening right now is exactly why people just get so frustrated with Washington," said Obama, relishing the chance to play the role of a tax break defender. "The people standing with me today can't afford any more games."

Some Tea Party Republicans expressed disappointment in the temporary agreement.

"This holiday season, Washington wrapped and put under the tree a gift of more uncertainty for America," said freshman Rep. Tim Huelskamp, R-Kan. "We were sent here with a clear set of instructions from the American people to put an end to business as usual in Washington, yet here we are being asked to sign off on yet another gimmick."