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Payroll Deal Done

House Republicans dig in further as president meets with working families.


House Speaker Rep. John Boehner, R-Ohio, pauses during a news conference to announce an agreement on a two-month extension to the payroll-tax cut on Capitol Hill on Thursday.(AP Photo/Evan Vucci)

The showdown's over--almost.

House Speaker John Boehner announced on Thursday that he had reached agreement with Senate Majority Leader Harry Reid to avert a tax hike for 160 million Americans. And he came about as close to admitting defeat as you get in Washington. Referring to his fight for a year-long extension of the payroll tax cut, he said "it may not have been the politically smartest thing to do."


(RELATED: Text of the Bill to Extend Payroll-Tax Cut for 2 Months)

That deal has to be approved by an ornery House Republican Conference that has a history of bucking its leadership. Boehner will offer the agreement under unanimous consent rules and he said that if any member objected, he would call the House back into session.

Small changes in the deal that Boehner was rejecting just a few hours earlier gave the speaker a very small fig leaf with which to cover his defeat, but not much. Still, he waxed proud: "It's always right to do the right thing."


The day had a roller coaster quality to it that made it memorable even during a 2011 marked by brinkmanship on Capitol Hill.

Congressional leaders and President Obama appeared before cameras in the morning to argue their positions about a potential tax hike for working families, each side digging in. By the afternoon, in what looked like an indicator of a House Republican thaw, two GOP House members announced that they had changed their minds and declared they wanted a vote on the short-term extension Boehner rejected.

Obama officials and congressional Democrats had always believed that Boehner's isolation is hurting him politically and they never threw him a lifeline.

House Republicans seemed to recognize the bind they were in and some broke ranks. Sean Duffy, R-Wis., who represents a competitive district, came out for the short-term extension. Whether Duffy's an outlier or represents the dam breaking remains to be see. Rick Crawford, R-Ark., called for a vote on the two-month extension. On Tuesday, his office had issued a press release calling the two-month plan irresponsible.


In a significant move that may have propelled the deal, Senate Minority Mitch McConnell forthrightly broke with the House Republican leadership and urged them to pass a short-term extension of the payroll tax cut and unemployment benefits.

If McConnell was icy towards his House counterparts, Obama appeared positively exacerbated as he appeared with working families who will be hurt by the tax hike that will average some $40 per biweekly paycheck. "Enough is enough," the president said.

Noting that the short-term extension had passed overwhelmingly in the Senate, he said that the current debacle was not a case of party against party.

"Has this place become so dysfunctional that even when people agree we can’t do something?" Obama asked.

McConnell's statement added another dimension to the confrontation between the chambers. He indicated he would not oppose a House-Senate conference but only if the House passed a short-term extension of a payroll tax cut that the Senate approved last week.

Over on the House side of the Capitol, Boehner used a morning press availability with House Republican leaders to plead his case.

"It's better for jobs. It's better for the economy," Boehner said of the short-lived GOP plan for a one-year extension, arguing that a short-term measure denied businesses certainty in their planning and hiring and would cut into job creation as well as providing smaller benefits workers than a one-year bill would.

Earlier in the day, in a phone call with the president, Boehner asked for the White House to send its top economic advisers to the Hill to negotiate but the offer was declined.

If there was any softening in the House GOP position, at least in the morning, it was in emphasizing that a House-Senate conference, with White House input, would be a simple matter. "There's not a big difference between our positions," said House Majority Leader Eric Cantor, R-Va., noting that the president had gone shopping with his dog the day before. "He can bring his dog up here. We’re pet friendly. We could probably resolve the differences within an hour."

Cantor's was exaggerating, at best.

Of course, more fights lie ahead. The differences between the sides on how to pay for the extended tax cuts for a year-long deal are still far apart with the GOP looking for savings in pay freezes of government workers--something that Democrats are opposing.

The stakes had been high.

Without congressional action, payroll taxes would have risen on Jan. 1 and unemployment benefits wouldn't have been extended. What’s more, doctors will see a dramatic fall in their Medicare reimbursements without a fix to stop payments from being slashed by 27 percent. Aside from the pain that would have been felt by individuals, the economy as a whole, experts agree, would have suffered.

The White House has used the confrontation to political advantage. A Facebook-and-Twitter campaign to get Americans to tell their stories about what the tax hike would mean brought more than 30,000 responses so far, according to the White House. The president cited some of them including a father who would be forced to sacrifice "pizza night" with his kids, and a son who would have to reduce his 100-mile drives to visit to his father in a nursing home.

The whole conundrum put the president on the side of preserving a tax cut while Republicans seemed like obstructionists. That political dynamic proved untenable to House leadership and arguably put the president in his best political position since the killing of Osama Bin Laden.

It didn't help Boehner that prominent Republican senators like John McCain, R-Ariz., the party’s standard bearer in 2008 against then-Sen. Barack Obama, has criticized the House for its refusal to go alone with the extension. The rest of the Senate Republican conference seems in no mood to lock arms with the House.

And two months from now, in the white hot heat of the presidential primaries, Congress will be at it again.

Obama: 'Enough is Enough' 12/22/11

Ben Terris, Shane Goldmacher, and Katy O Donnell contributed contributed to this article.

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