Senate Democrats see short-term loss, long-term gain in payroll tax deal

Senate Democrats emerging from a closed-door meeting Friday night were of two minds about the payroll tax cut plan negotiated by party leaders – at once acknowledging that the deal handed Republicans a victory on the Keystone XL oil sands pipeline but at the same time arguing that the short-term package would put Democrats on offense come the new year.


Sen. Tom Harkin (D-Iowa) said Democrats “will be in the driver’s seat” next year. (Alex Wong/Getty Images)

“I think the key point is that we got the payroll tax extension,” Sen. Kay Hagan (D-N.C.) said, noting that she tentatively plans to back the measure. “And I think we wanted to be sure at this point in time, with unemployment where it is, that we’d definitely be able to help with unemployment insurance and to be sure that working families did not see a cut in their take-home pay; that’s been very important.”

Sen. Chris Coons (D-Del.), like most other senators leaving Friday’s meeting, said he was disappointed that the deal was only a short-term one because “a year would be much better for the economy and for a lot of families and businesses; the uncertainty isn’t good.”

But he noted that he trusted leadership’s word when it came to the options that were on the table during the negotiations.

“At the end of the day, when there’s been heavy negotiating between our leadership and theirs for a long time, you have to take your own leadership’s word about what the alternatives were that were less appealing,” he said.

The prime components of the deal, which is scheduled for a Senate vote early Saturday morning, are a two-month extension of the payroll tax cut for workers and the inclusion of a measure requiring the Obama administration to make a speedy decision on whether to grand a permit for the construction of the Keystone pipeline.

Republicans on Friday had ramped up their calls for the inclusion of the pipeline provision, which was part of the payroll tax package passed by the House earlier this month.

A Senate Republican aide said Friday night that the deal was “not how the president envisioned it would turn out.”

“Three months ago, the president came before Congress and called for a much more expensive payroll tax provision, paid for with tax hikes,” said the GOP aide, who spoke on condition of anonymity to talk candidly about the deal. “It was a bill designed to fail, a bill designed to give the president a campaign message. Now, it’s Republicans supporting a two-month extension of the more modest current law, fully paid for, with no tax hikes -- and the Keystone XL bill as a bonus.”

Some Democrats on Friday tried to put a positive spin on the pipeline battle, arguing that the inclusion of the provision is a short-term political win for Republicans but actually would take a back seat in the longer-term battle, set to begin early next year, over renewing the payroll tax cut.

A Senate Democratic aide, who also spoke on condition of anonymity to discuss the deal freely, called the Keystone measure a “straw man” set up by Republicans and argued that “all they’re doing is ensuring the pipeline gets killed” since the State Department has said that the 60-day deadline set by the provision would make it impossible for a permit to be issued.

Sen. Jeff Merkley (D-Ore.) echoed that sentiment, noting that the Keystone provision “leaves the president the power that he already has.”

“It gives him a lot less time to do the studies he wanted, but it’s better than it could’ve been, and it leaves the decision still in his hands,” Merkley said.

By contrast, the next time the payroll tax cut deadline comes up in February, Republicans “will have to find a new reason to oppose it,” the Democratic aide said, likening the short-term and long-term battles to a game of checkers versus a game of chess.

“Republicans are winning in the game of checkers; we’re winning in the game of chess,” said the aide.

Even so, it’s worth noting that the White House made two distinct calls for action during the payroll tax debate, urging lawmakers earlier this month not to back a deal that included the pipeline and then, late Wednesday, advocating for passage of a stop-gap government funding measure rather than a comprehensive bill that Democrats had sought to link to the tax package.

Neither of those calls was heeded: the Senate is on track Saturday to pass the broader funding measure, and the payroll tax package includes the Keystone measure.

Sen. Tom Harkin (D-Iowa) argued that Democrats will “be in the driver’s seat” when Congress revisits the payroll tax cut debate in January, when the holiday season will be over, Obama will deliver his State of the Union address and the presidential campaign will be in full swing.

“We’ll be looking at the economy – do the Republicans want the economy to tank, or do they want it to keep going up? ... That’s what the issue is,” he said, previewing the Democratic message. “The Republicans basically want to defeat Obama so badly that they’re willing to let the economy go down the tubes to do that.”

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