The House Backs Down on the Payroll Tax Cut

John Boehner

The House Republicans’ stubborn opposition to the extension “may not have been politically the smartest thing in the world,” Speaker John Boehner said, in the understatement of the week. He still called it “a good fight.”

If the deal goes through on Friday — and even one angry lawmaker could stall it — the paychecks of 160 million workers will not shrink for at least eight weeks and three million jobless workers will keep their benefits. That will be paid for largely by mortgage fees, and negotiations will resume on paying for the remaining 10 months.

A Republican demand that President Obama make a decision on the Keystone XL oil pipeline will remain in the measure, as negotiated by the Senate last week. Republicans also won some minor adjustments to prevent small businesses from being harmed by the extension.

The struggle to reach an agreement, which was a clear victory for President Obama, exposed voters in the starkest way to the real temperament of the House that Americans elected a year ago. If the president wants it, they’re against it. If it might assist the middle class, as opposed to the rich, they will concoct an economic argument to oppose it. (“The payroll tax cut isn’t really that effective.”) And if it absolutely has to pass, they will throw in stray ideas — an oil pipeline, air pollution regulations — to win some part of their agenda, or kill the bill trying.

The Republican wounds this time were entirely self-inflicted. The crisis over the two-month extension wasn’t really about the payroll tax at all; it was about the hurt feelings of bumptious House members having to accede to a deal driven by the Senate and the White House. The real confrontation, over paying for the tax cut, is yet to come.

The only reason the Senate approved a two-month extension is that the two parties could not agree on how to pay for a full year. Before the House’s tantrum, Democrats had proposed an income-tax surcharge on millionaires, which would have been an eminently fair trade to help the middle class and the economy, but Republicans rejected it. The Republicans wanted to cut social spending more than the deal reached earlier this year, and make health insurance exchanges more expensive to undermine health care reform. Democrats were right to balk at that.

When the next battle comes, Democrats will presumably be facing a more cohesive group of Republican negotiators. Having already given in on the millionaires’ tax and the pipeline, they will have to push hard to prevent further damage to the economy. Still, this narrow victory showed the limits to Republican brinkmanship. Popular opinion was clearly on the side of the Democrats, as members heard from their constituents, and that momentum may produce a better long-term agreement.

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