Payroll tax fight leaves Hill Republicans divided and angry

Video: President Obama spoke on Friday after Congress approved the payroll tax cut extension through February. The President urged Congress to extend the tax cut through all of 2012. (Dec. 23)

“Here’s my lesson learned: Clearly it demonstrates that common sense doesn’t get in the way of political necessity,” said Rep. Bill Huizenga (R-Mich.). He said the two-month agreement makes no sense for businesses that prepare payrolls on a quarterly basis. “We’re again seeing the lack of an ability to make hard decisions about long-term issues.”

To get a full-year deal on the payroll tax — as well as to extend unemployment benefits and avert cuts in Medicare rates, which are in the same package — Democrats and Republicans will have to bridge a deep divide over whether such items should be funded through cuts in spending or higher taxes on wealthy people.

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Highlights of legislation renewing payroll tax cuts, jobless benefits approved by the House and Senate.
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Highlights of legislation renewing payroll tax cuts, jobless benefits approved by the House and Senate.

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It’s the same kind of split that bedeviled the 12-member deficit “supercommittee,” which disbanded in failure last month.

Republicans will likely try to eke out concessions from Democrats, knowing that Obama has made the continuation of the tax cut a top priority. In the deal approved Friday, Republicans already got one major win — a requirement that the administration make a speedy decision on whether to allow construction of the Keystone XL oil pipeline.

But their bargaining hand will not be strong, because a deal is now more important for the GOP. That’s because party leaders have spent the past week insisting that a full-year cut is necessary for the economy. And they have gotten a taste of the political consequences of letting Obama portray them as willing to let taxes rise for 160 million workers, as he has in recent days.

The $33 billion package was approved Friday in voice votes in the House and Senate, each lasting only a couple of minutes, and signed into law immediately by Obama.

In brief remarks after the bill’s passage Friday, Obama praised Congress for ensuring that Americans’ payroll taxes will not rise next month. And he said lawmakers should move quickly in January to extend the tax cut for a full year.

“When Congress returns, I urge them to keep working, without drama, without delay, to reach an agreement that extends this tax cut, as well as unemployment insurance, through all of 2012,” he said. “It’s the right thing to do because more money spent by more Americans means more businesses hiring more workers. That’s a boost for everybody, and it’s a boost we very much need right now.”

“Aloha,” he concluded, departing the White House to join his family in Hawaii for a Christmas vacation he had delayed because of the tax fight.

House Speaker John A. Boehner (R-Ohio), who stood alone at the microphones Thursday night to announce that he would accept the two-month deal in exchange for a promise from Reid to immediately begin negotiations over a full-year deal in January, presided over the brief House session.

And then he left the Capitol, without offering further comment.

This month’s debate revealed a deep division among Republicans about whether the payroll-tax cut has been a good idea. Those voices are likely to grow stronger in January because of unhappiness with how leaders handled the fight this month. In particular, many House Republicans say they feel betrayed by colleagues in the Senate.

As the week wore on, a steady stream of Republican senators came forward to say the House should abandon its demand for further negotiations to get a full-year deal that might include elements such as a continued pay freeze for federal employees.

Boehner’s hand was ultimately forced by McConnell, who after days of silence emerged Thursday to urge the House to back the 60-day fix in exchange for Reid appointing negotiators to start new talks in January.

“I feel really let down by the Senate Republicans,” said Rep. Jason Chaffetz (R-Utah). “We were under the impression that we were strengthening the Senate’s hands and that by passing this tough bill it would give Mitch McConnell more room to negotiate.”

Instead, he said, McConnell “just rolled over to get his belly itched.”

Staff writers David A. Fahrenthold and Felicia Sonmez contributed to this report.

 
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