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Published:

Tax cut lives on: Congress gives its approval

Published - Dec 23 2011 03:01AM EST

ANDREW TAYLOR, Associated Press

President Barack Obama speaks during a news conference in the South Court Auditorium at the White House complex, Thursday, Dec. 22, 2011, in...

(ASSOCIATED PRESS)

President Barack Obama speaks during a news conference in the South Court Auditorium at the White House complex, Thursday, Dec. 22, 2011, in Washington. The president was flanked at the White House by several people who commented on Twitter about how they would be impacted if the tax cuts were not extended. (AP Photo/Carolyn Kaster)

WASHINGTON (AP) — 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 of his back."

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," Senate Majority Leader Harry Reid, D-Nev., said.

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."

Entry #201

Comments

1.
JAP69Comment by JAP69 - December 23, 2011, 3:15 pm
Well good.
That was a deliberate setup by the dems to dump on the house republicans. What is wrong with a one year bill rather than 2 months. The dems in the house had a difficult time defending their position as I watched it on tv.
Pres Obama wanted a one year bill to start with then Reid got in on it for two months after it came from the house for one year. Pres Obama and Reid set this whole thing up to dump merde on the house.
Have a Happy Dec 25th democrats.
2.
TenajComment by Tenaj - December 23, 2011, 4:46 pm
That bill have attachments to it (health care/pipeline etc. that both want to control. We should have bills with no attachments, then the public wouldn't have to figure out what's really going on.
3.
JAP69Comment by JAP69 - December 23, 2011, 6:29 pm
Pass the bill so we can find out whats in it.
I did not hear any democrats in the house debate on the bill bring up any of those issues the day I heard it which was the last day of debate.
What is wrong with a pipeline supplying America with oil? Plus creating thousands of jobs. Obviously dems are not job creators. Oh thats right extending unemployment is going to create 600,000 jobs.
Wea I heard something about a drug test for unemployment. That was out of line.
Whos paying for this I heard. An added cost to mortgage borrowers. Take from one to give to another.
It would not surprise me they are working on eliminating the FICA tax altogether. That way no one will need to work so many quarters to qualify or none at all. Everyone will be getting the same amount in retirement at retirement age. Going to be where it ends up where they do a means test at retirement to determine if you even do get any. Do not pay in to a system they are not required to give any.
4.
rdgrnrComment by rdgrnr - December 23, 2011, 7:37 pm
This whole thing is easier to understand when you accept the fact that Obama is determined to bring this country to collapse. He just has to walk a thin line for the time being, pretending to work in our best interests. We will see the real Obama in earnest and in action if he gets a second term. When he said to join him to "fundamentally change this country" he meant it. He hates this country and everything we stand for.
5.
tiparker119Comment by tiparker119 - December 23, 2011, 7:42 pm
Thank You rdgrnr....you speak the TRUTH...!!! BO must GO...!!!
6.
Jack-CComment by Jack-C - December 23, 2011, 7:47 pm
Everyone talks about how sad that Social Security is "short" of funds, but they want an FICA tax cut!! That is what funds (is supposed to) SS. But a "tax cut" sounds better to the voters!
7.
ToddComment by Todd - December 23, 2011, 8:35 pm
@rdgrnr & @Jack-C: I agree with you guys. The whole idea of cutting the payroll tax is stupid, and does nothing to "help the economy". It only worsens the country's financial situation in order to prop up these idiot politicians.

Frankly, the whole thing about trying to negotiation for a full year instead of 2 months was a bonehead move by the House Republicans. Just plain stupid. They should have taken the plan negotiated by McConnell in the Senate, and just passed it as-is. It was a good compromise.

The whole idea of trying to say that a full year of payroll cuts would have brought certainty to the markets and to businesses is so stupidly false. Payroll tax cuts do not help businesses at all. That money either goes towards Social Security, or it goes into the Employees' pockets -- not any part of it helps businesses or establishes some kind of certainty in the markets.

The only thing that helps certainty is INCOME TAX RELIEF FOR UPPER-INCOME PEOPLE, because those are the people who own small businesses (since small businesses normally report the business's income as personal income), and THAT extra money will often go toward hiring more people and expanding the business. A short-term relief in income taxes does NOT help, because the small business owners know that when the short-term relief is finished, they will be back to not being able to afford more workers. So they don't hire them in the first place.

This episode proves beyond a shadow of a doubt how Republicans will always grab defeat from the jaws of victory.
8.
Jack-CComment by Jack-C - December 23, 2011, 9:59 pm
Right on, Todd.
9.
sully16Comment by sully16 - December 24, 2011, 8:28 am
This is my third day off this month, why, because it's Christmas , and I had to cover shifts for people calling in, give you one guess who they were. you would think they would want more hours, nope, got all the freebies covered.
We cannot continue on, with less people employed and the government spending more, but, thats the plan, destroy the currency. This is nothing more then slight of hand and the weak minded will think it's the greatest thing.
Seems like they want to make sure less people are working and there are less private sector jobs.
Our end will not come from a comet or a flood or earthquake, solar flares, we will destoy each other for a battle for food and water.
The lower our currency becomes, the more expensive everyday things will become, we will reach critical mass and chaos will be the normal way of life. God help us all if we don't get people in office who see a bigger picture and try to prevent monetary meltdown.

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