After weeks of bickering and doubt, Congress delivered a last-minute holiday tax cut extension to 160 million workers Friday along with further unemployment benefits for millions laid off in the nation’s fierce recession and weak economic recovery. It was a convincing victory for President Barack Obama, a humbling retreat for House Republicans.
Back-to-back voice vote approvals of the two-month special measure by the Senate and House came in mere seconds with no debate, just days after House Republican leaders had insisted that full-blown negotiations on a full-year bill were the only way to prevent an immediate tax increase on Jan. 1.
Most members of Congress were already gone for the holidays, leaving behind just a few legislators to take formal action. Obama was leaving in the afternoon for a delayed vacation in Hawaii.
The measure passed despite lingering grumbling from tea party Republicans. It buys time for talks early next year on how to finance the year-long extensions.
It will keep in place a 2 percentage point cut in the payroll tax — a salary boost of about $20 a week for an average worker making $50,000 a year — and prevent almost 2 million unemployed people from losing jobless benefits averaging $300 a week.
Senate and House Republican leaders did gain a major win last week, winning a provision that would require Obama to make a swift decision on whether to approve construction of the Canada-to-Texas Keystone XL oil pipeline. To stop construction, Obama, who had wanted to put the decision off until after the 2012 election, would have to declare that it was not in the nation’s interest.
Passage of the tax bill in the House ended a holiday season Republican confrontation with Obama and Senate Democrats that had threatened to hit 160 million workers with a tax increase on Jan. 1. But it backfired badly. Even Republican Senate leader Mitch McConnell and the Wall Street Journal editorial board urged Speaker John Boehner and other House Republicans to act quickly and keep the tax cut in effect.
On Friday, an expressionless Boehner read from a piece of paper before him, gaveled the House’s last session of the year closed and stepped off the podium on the Democratic side. He hugged the dean of the House, Rep. John Dingell, D-Mich.
“I wished him a Merry Christmas,” Dingell said afterward. “I think he’s somewhat at ease to have this mess off his back.”
Democratic Senate leader Harry Reid, referring at least in part to legislators elected last year with tea party support, said he hoped the events had been “a very good learning experience, especially to those who are newer to this body. Everything we do around here does not have to wind up in a fight.”
A full-year extension of the tax cut had been embraced by virtually every lawmaker in both the House and Senate but had been derailed in a quarrel over demands by House Republicans. Senate leaders of both parties had tried to barter such an agreement among themselves a week ago but failed, instead agreeing upon a 60-day measure to buy time for talks next year.
Thursday’s decision by Boehner, R-Ohio, to cave in to the Senate came after days of criticism from Obama and Democrats. But perhaps more tellingly, GOP stalwarts including Republican senators and outside strategists warned that if the tax cuts were allowed to expire, Republicans would take a political beating that would harm efforts to unseat Obama next year.
House GOP arguments about the legislative process and what the “uncertainty” of a two-month extension would mean for businesses were unpersuasive, and Obama took the offensive.
Friday’s House and Senate sessions were remarkable. Both chambers had essentially recessed for the holidays but leaders in both parties orchestrated passage of the short-term agreement under debate rules that would allow any individual member of Congress to derail the pact, at least for a time. None did.
The developments were a clear win for Obama. The payroll tax cut was the centerpiece of his three-month, campaign-style drive for jobs legislation that seems to have contributed to an uptick in his poll numbers — and taken a toll on those of congressional Republicans.
Obama, Republicans and congressional Democrats all said they preferred a one-year extension but the politics of achieving the goal, particularly the spending cuts and new fees required to pay for it, eluded them. All pledged to start working on that in January.
“There remain important differences between the parties on how to implement these policies, and it is critical that we protect middle-class families from a tax increase while we work them out,” said Senate Majority Leader Reid, D-Nev.
House GOP arguments about the legislative process and what the “uncertainty” of a two-month extension would mean for businesses were unpersuasive. The two-month version’s $33 billion cost will be covered by a .1 percentage point increase on guarantee fees on new home loans backed by mortgage giants Fannie Mae, Freddie Mac and Ginnie Mae — at a likely cost of about $17 a month for a person with a $200,000 mortgage.
“Has this place become so dysfunctional that even when we agree to things, we can’t do it?” Obama said on Thursday. “Enough is enough.”
The top Senate Republican, McConnell of Kentucky, was a driving force behind the final agreement, imploring Boehner to accept the deal that McConnell and Reid had struck last week and passed with overwhelming support in both parties.
Meanwhile, tea party-backed House Republicans began to abandon their leadership.
“I don’t think that my constituents should have a tax increase because of Washington’s dysfunction,” freshman Rep. Sean Duffy, R-Wis., said.
If the cuts had expired as scheduled, 160 million workers would have seen tax increases and up to 2 million people without jobs for six months would start losing unemployment benefits averaging $300 a week. Doctors would have seen a 27 percent cut in their Medicare payments, the product of a 1997 cut that Congress has been unable to fix.
Even though GOP leaders like House Majority Leader Eric Cantor, R-Va., promised that the two sides could quickly iron out their differences, the truth is that it’ll take intense talks to figure out both the spending cuts and fee increases required to finance the measure.
Just hours before he announced the breakthrough, Boehner had made the case for a yearlong extension. But on a brief late afternoon conference call, he informed his colleagues it was time to yield.
“He said that as your leader, you’ve in effect asked me to make decisions easy and difficult, and I’m making my decision right now,” said Rep. Jack Kingston, R-Ga., paraphrasing Boehner’s comments.
Kingston said the conference call lasted just minutes and Boehner did not give anyone time to respond.
There was still carping among tea party freshmen upset that GOP leaders had yielded.
“Even though there is plenty of evidence this is a bad deal for America … the House has caved yet again to the president and Senate Democrats,” Rep. Tim Huelskamp, R-Kan., said. “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.”