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In payroll tax extension fight, which side blinks first?

WASHINGTON — The Senate is gone, the House is packing up, and for now that means working Americans will see their taxes rise in January.

After weeks of bitter partisan wrangling, the Capitol emptied for the holidays with no sign of negotiation toward a compromise that would save an expiring tax break. As of Jan. 1, the payroll tax cut that has been in place all year is scheduled to return to 6.2 percent from its current 4.2 percent, meaning that biweekly paychecks on average will be $40 smaller. Long-term unemployment benefits for 3 million people also are poised to expire, and doctors face an estimated 20 percent cut in Medicare payments.

Facing that unpleasant reality, Republicans fell into an angry family feud over their strategy. Several GOP senators who face re-election next year accused their House GOP colleagues of acting irresponsibly. The House voted to disagree with the bipartisan bill the Senate had passed to preserve the tax cut for two months so Congress would have more time to work on a full-year extension. Seven House Republicans joined Democrats in opposition. The Florida delegation voted along party lines; Republican Reps. Vern Buchanan and Mario Diaz-Balart did not vote.

Democrats were happy to accuse Republicans of voting to block a tax cut and leaving town without finishing their work — the same argument Republicans planned to use on them.

"The issue right now is this: The clock is ticking; time is running out," President Barack Obama said in a statement at the White House after the vote. "And if the House Republicans refuse to vote for the Senate bill, or even allow it to come up for a vote, taxes will go up in 11 days."

This was not a fight that seasoned Republican lawmakers, most prominent among them House Speaker John A. Boehner of Ohio, would have chosen. They see no value in having Americans think Republicans are allowing a tax increase, a message the White House continues to broadcast daily. Senate Republicans calculated that it was better to agree to an imperfect compromise, one that extends the tax break a couple of months and buys more negotiating time, than to try to argue otherwise.

But those voices were drowned out by hard-charging House conservatives and their tea party partners, who pushed the GOP to instigate one last round of brinkmanship as the year ends. Boehner took up their cause, and is now withstanding grumbling from within his ranks and Republican allies in the Senate who view this as a no-win battle.

Finding compromise on a full-year deal would require consensus on the same tax and spending debates that have jammed budget talks all year. Democrats will not agree to steep cuts the GOP has demanded to pay the $200 billion costs of a yearlong tax cut package that both parties say they want. Unlike past tax deals, the GOP insists this one be paid for — a position Democrats share.

Because Republicans refused to consider Obama's proposal to cover the costs by imposing a surtax on those earning more than $1 million annually, Democrats see the GOP in the uncomfortable position of blocking a tax increase on the affluent while allowing one on 160 million American workers. If the tax benefit lapses, they calculate that Republicans will get the blame.

"I saw today that one of the House Republicans referred to what they're doing as high-stakes poker," said Obama, who appeared at the daily White House briefing. "He's right about the stakes, but this is not poker, this is not a game — this shouldn't be politics as usual."

Obama, whose family is in Hawaii for the holidays, delayed joining them by another day, with aides saying he held out hope that House Republicans would reconsider the Senate measure.

Boehner also tried to use his megaphone. At a news conference with members lined up on a riser like a church choir, the speaker urged Obama to call the Senate back into session.

"Now, it's up to the president to show real leadership," Boehner said. At one point, the lawmakers cheered.

The GOP appointed eight negotiators to work over the holidays in hopes that the Senate would return to the bargaining table. Some other House members planned to remain in Washington as a show of support.

After seeing the difficulty this Congress has had finding compromise and wanting a break from a year of fierce partisan battles, GOP senators thought it best to approve the stopgap measure.

"I'm not going to argue with the House of Representatives, but do they want taxes to go up on January the 1st, or don't they?" said Sen. Charles Grassley, R-Iowa, who voted for the compromise. "If they don't do anything, the chances are taxes would go up."

What's at stake?

•Payroll taxes for 160 million Americans will rise to 6.2 percent, from 4.2 percent, in January, for an average annual increase of roughly $1,000.

• People out of work for more than six months will start losing jobless benefits. By mid-February, the Labor Department estimates, 2.2 million workers would have lost jobless benefits, and by the end of March, 3.6 million will be affected.

Now what?

There are several ways the matter could still be resolved. Republicans could decide to accept the two-month extension as is or with additional sweeteners, like a promise that a conference committee would meet to seek a longer-term extension, but such a move would require unanimous consent from the Senate. They could add another social policy rider, as is their tendency, and the Senate could toss it off the bill later, through a procedure that has been employed in the past. Or they could do similar procedural moves with a bill to extend the benefits for a year, which has been the goal of Obama and Democrats all along.

New York Times, Associated Press

What's at stake?

•Payroll taxes for 160 million Americans will rise to 6.2 percent, from 4.2 percent, in January, for an average annual increase of roughly $1,000.

• People out of work for more than six months will start losing jobless benefits. By mid-February, the Labor Department estimates, 2.2 million workers would have lost jobless benefits, and by the end of March, 3.6 million will be affected.

Now what?

There are several ways the matter could still be resolved. Republicans could decide to accept the two-month extension as is or with additional sweeteners, like a promise that a conference committee would meet to seek a longer-term extension, but such a move would require unanimous consent from the Senate. They could add another social policy rider, as is their tendency, and the Senate could toss it off the bill later, through a procedure that has been employed in the past. Or they could do similar procedural moves with a bill to extend the benefits for a year, which has been the goal of Obama and Democrats all along.

New York Times, Associated Press

In payroll tax extension fight, which side blinks first? 12/20/11 [Last modified: Tuesday, December 20, 2011 11:19pm]

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