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Tax cut lives: Congress gives last-minute approval

Friday, December 23, 2011 | 1:07 p.m. CST; updated 2:04 p.m. CST, Friday, December 23, 2011

WASHINGTON — After weeks of bickering and doubt, Congress delivered a last-minute holiday tax cut extension to 160 million American 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.

Obama quickly signed the legislation, declaring it was "some good news just in the nick of time for the holidays." But he added that serious and difficult work lay ahead for Congress and the administration after the break for Christmas and New Year's.

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 yearlong 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. Obama also said there was serious work ahead next year and urged lawmakers to seal agreement on a full-year measure "without drama, without delay."

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 off his back."

Democratic Senate leader Harry Reid, referring at least in part to legislators elected last year with tea party support, said he hoped the events had been "a very good learning experience, especially to those who are newer to this body. Everything we do around here does not have to wind up in a fight."

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

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 0.1 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."

 


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Comments

Derrick Fogle December 23, 2011 | 8:10 p.m.

Clown. Factory.

(Report Comment)
frank christian December 23, 2011 | 8:26 p.m.

"Clown. Factory." - Controlled by Democrats!

(Report Comment)
frank christian December 23, 2011 | 8:50 p.m.

"The two-month version's $33 billion cost will be covered by a 0.1 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. This will more than likely imo, cause an increase in the bonuses of the criminals running fred/fann, or at any rate take 10 years to be recovered by our Federal Government, according to accounts I have heard. These D's are willing to pay for all their excess spending and of course always have the American "middle class" uppermost in their mind. Their "mind" is of one and the same, always.

(Report Comment)
Ed Lane December 25, 2011 | 2:43 p.m.

These clowns we have elected and put in these positions of power need to be held accountable for what they do and don't do!!!!!!!!! They work for us, the tax payers, and not some political party. The d's seem to forget this on a regular basis.

(Report Comment)
Jonathan Hopfenblatt December 25, 2011 | 4:19 p.m.

Uh, self-centeredness isn't exclusive to the democrats, Ed. And because someone a while back tried to argue that republicans are better than democrats because conservatives tend to be happier (which is true), I figured I'd re-post the link I found back then:

http://isites.harvard.edu/fs/docs/icb.to...

"...we found that right-wing (vs. left-wing) orientation is indeed associated with greater subjective wellbeing and that the relation between political orientation and subjective well-being is mediated by the rationalization of inequality. In our third study, we found that increasing economic inequality (as measured by the Gini index) from 1974 to 2004 has exacerbated the happiness gap between liberals and conservatives, apparently because conservatives (more than liberals) possess an ideological buffer against the negative hedonic effects of economic inequality."

Contrary to the claim that liberals (aka democrats) routinely forget who they work for, the research on the manner suggests that it's the opposite. Conservatives (aka republicans) apparently have the ability to rationalize inequality away, aka it bothers them a lot less that there are so many poor people out there. With that in mind, who do you think is more likely to keep the taxpayers in mind, liberals or conservatives?

(Report Comment)
mike mentor December 25, 2011 | 5:09 p.m.

A study on liberal and conservative babies. They took the babies and set them on the ground with a divider up between the babies and their moms. The conservative babies tried to solve their problem by making their way to the barrier and looking for ways to get across the barrier. The liberal babies just sat there and cried about how unfair it was.

Merry Christmas !!!

(Report Comment)
Mark Foecking December 26, 2011 | 7:48 a.m.

Anyone that worries about matters outside of their control is going to be unhappier than someone who only concerns themselves with what they can actually change. For me to worry over whether Warren Buffett has $60 billion dollars and I don't, isn't going to make him any poorer or me any richer. And I don't think this is as much a right-left issue as much as one of simple wisdom. People will be happier solving problems rather than worrying about things they can't solve, no matter what your politics.

DK

(Report Comment)
frank christian December 26, 2011 | 10:57 a.m.

Mark F. - "For me to worry over whether Warren Buffett has $60 billion dollars and I don't, isn't going to make him any poorer or me any richer. And I don't think this is as much a right-left issue as much as one of simple wisdom."

Quite right about the wisdom of your theory, but somehow, it always seems easier for you to forget why you mentioned Buffett rather than say Murdock, or Soros? Imo, it is because Buffett, publicly sprays the liberal spiel and therefore is lovingly promoted by the liberals as the one we must listen to?

It is "left-right" in any direction now, because of the changes to the way we are governed and the way we live that are being foisted upon us every day, every way by the progressive left.

(Report Comment)
Derrick Fogle December 26, 2011 | 12:56 p.m.

Then again, get a big enough group of people willing to go along with something, that group might just gain some control over what they previously had no control over. Don't laugh, it's been done before.

If you want to get a group of people together to gain control of something, few things are as effective as an appeal to basic fear. Appeals to greed are a distant 2nd best.

Don't call them "Rich." Call them "Economic Terrorists."

(Report Comment)
Jonathan Hopfenblatt December 26, 2011 | 1:48 p.m.

@Mark F.: It's not worrying about things we can't solve; it's worrying about things that we COULD solve were it not for the fact that the system is fundamentally flawed.

This to me is more the result of the usual "what you don't know doesn't hurt you" phenomenon, coupled with a lack of empathy toward others. We're actually all guilty of this from a psychological standpoint (we care more about the potential death of one person versus genocide, for example), but IMO the right way to approach the problem is not to pretend the problem doesn't exist in order to make ourselves feel better. Caring on its own might be useless, but it's still a start.

http://journal.sjdm.org/jdm7303a.pdf

But, I'm already veering way off topic. I think I'll shut up after this and let everyone else do the talking.

(Report Comment)

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