Payroll Tax Battle With G.O.P. Gives Lift to Obama

At stake were continued payroll tax cuts for 160 million workers and aid for several million long-term unemployed Americans that expire Dec. 31. The holiday brinkmanship over the issue recalled the December budget showdown 16 years ago between another first-term Democratic president, Bill Clinton, and a new Republican Congressional majority — a fight that capped their year of confrontation over the nation’s fiscal priorities by reviving Mr. Clinton politically as he began his re-election race.

But the impasse was not without risks for Mr. Obama. Democrats fretted that Mr. Obama’s vow to stay in Washington through Christmas and New Year’s to get a deal would backfire should he join his family in Hawaii before a resolution. Also, though House Republicans were bearing the brunt of criticism for the latest show of Washington dysfunction, Mr. Obama could be hurt if the tax break and jobless aid are not extended and the fragile economy sours, as nonpartisan economic forecasters have warned it will without the continued stimulus measures.

And while even other Republicans were predicting that the House Republicans would have to blink, or risk further political damage, the ugliness of the fight reminded Americans yet again of the seeming futility of Mr. Obama’s 2008 campaign promise to make Washington work as the year of his re-election race is upon him.

By Wednesday most lawmakers had scattered for the holidays. Yet party leaders remained behind, standing their ground and trying to shift blame to the other side. A 10-minute phone conversation between Mr. Obama and Speaker John A. Boehner was apparently fruitless, according to aides to both, and afterward each side described the call on its own terms.

Mr. Obama called Mr. Boehner shortly after noon and urged him to have the House reconsider and approve the compromise two-month extension of the payroll tax cut and unemployment assistance that Senate Democrats and Republicans overwhelmingly approved over the weekend with Mr. Obama’s support. House Republicans rejected that compromise on Tuesday and demanded negotiations toward a full-year measure to keep most workers’ Social Security payroll tax at 4.2 percent, down from 6.2 percent.

According to a White House account, Mr. Obama told Mr. Boehner the bipartisan Senate bill “is the only option to ensure that middle-class families aren’t hit with a tax hike in 10 days and gives both sides the time needed to work out a full-year solution.”

But Mr. Boehner reiterated that House Republicans want a full-year extension like they approved earlier this month, though their measure did not have the president’s or the Senate’s support, largely because of unrelated provisions that House Republicans attached and because it would cut unemployment aid from current levels.

The speaker told Mr. Obama that the House Republican majority “was elected to change the way Washington does business and that we should not waste the next 10 days simply because it is an inconvenient time of year,” a Boehner aide recounted. According to the aide, who declined to be identified discussing the private call, Mr. Boehner told Mr. Obama, “Let’s get this done today.”

Because the Senate compromise had offered a bipartisan way out of the knot until the parties could negotiate a long-term fix in January — the Senate passed the temporary measure by a vote of 89 to 10, with 39 Republicans in support — House Republicans by their rejection of it drew fire not only from Democrats but from Senate Republicans and conservative pundits.

They awoke to an editorial in The Wall Street Journal, a beacon of conservative thought, headlined “The G.O.P.’s Payroll Tax Fiasco” and blaming House Republicans for not only squandering their party’s advantage on tax issues but also potentially helping to re-elect Mr. Obama. The theme was echoed among conservatives in the blogosphere.

With Republicans criticizing each other, Mr. Obama stayed out of the public eye except for a brief Christmas shopping foray.

Mr. Boehner, who last week had tried unsuccessfully to get his party to compromise, held a news conference with the Republicans he had appointed as negotiators to a nonexistent legislative conference committee. They faced 10 empty chairs meant to represent the missing Democrats. “We’re here,” he said. “We’re ready to work.”

But as even some conservatives were pointing out, the House Republicans’ attempts to seize the political high ground by advocating for a full-year payroll tax cut are undercut by their shifting stands in the months leading up to the showdown.

Mr. Obama first proposed in September, as part of his larger jobs creation package, to extend for another year the two-percentage-point payroll tax cut that he and Congressional Republicans had agreed to last December. A year ago Republicans had agreed to the cut and continued unemployment compensation in 2011 only after Mr. Obama agreed to support an extension of the Bush-era tax cuts on high incomes, which were due to expire after 2010, for two years through 2012.

Jennifer Steinhauer contributed reporting.

Article source: http://www.nytimes.com/2011/12/22/us/politics/obama-reaches-out-to-congressional-leaders-over-payroll-tax-standoff.html?partner=rssnyt&emc=rss

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