With payroll tax cut unresolved, Congress packs up

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% from its current 4.2%, meaning that biweekly paychecks on average will be $40 smaller.

Long-term unemployment benefits for some 3 million people also are poised to expire, and doctors face an estimated 20% cut in Medicare payments.

Facing that unpleasant reality, Republicans fell into an angry family feud over their strategy. Several GOP senators who face reelection next year accused their House 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.

Democrats, meantime, 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 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 as has happened so many times this year, those voices were drowned out in the House by hard-charging conservatives and their newly arrived 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 grumbles from within his ranks and the arrows of Republican allies in the Senate who view this as a no-win battle.

The difference between this stalemate and the many others that have defined the year in Washington is the role of Democrats, who have played defense in the year’s bruising budget battles, including the summer’s fight over raising the debt ceiling. This time, Obama and his fellow Democrats believe the public is on their side, and have expressed no interest in reviving talks they predict would yield little gain.

Finding compromise on a full-year deal would require consensus on the 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, Republicans insist this one be paid for — a position Democrats now 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 used his megaphone. At a news conference with lawmakers 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.

Republicans believe they are fighting the good fight. They say they prefer the traditional process of merging differing House- and Senate-passed bills into one.

The founding fathers might have appreciated the GOP’s effort to stick to the constitutional rules, but it is unclear that the public will find it compelling. Democrats are readying campaign lines of attack and using the stalemate to raise campaign funds.

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, even as most of their colleagues defended decisions to head home for the holidays.

“I don’t think the public insists we sit around here fiddling our thumbs,” said Rep. Steve King (R-Iowa), who was planning to spend Christmas with his five grandchildren at home.

But with senators long gone, Democrats showed no signs of budging. House Republicans also remained adamant.

“Democrats need to be careful — the president seems to be going on a scorched-earth policy,” said Rep. Jack Kingston (R-Ga.). “But if they think there’s not going to be collateral damage on their side, they’re out of their minds.”

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 for now.

“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?” Sen. Charles E. Grassley (R-Iowa), who voted for the compromise, said in a radio interview Tuesday. “If they don’t do anything, the chances are taxes would go up.”

That is a gamble both sides appear increasingly willing to take.

Christi Parsons in the Washington bureau contributed to this report.