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Payroll games

House Republicans retreat on tax holiday as the main event looms in 2012

Issue: "2012: The Year Ahead," Jan. 14, 2012

When the final congressional war of 2011 ended with a House Republican retreat, even House Speaker John Boehner had mixed reviews of the GOP's last stand.

"It may not have been politically the smartest thing in the world," Boehner said of House Republicans' initial insistence on an immediate year-long extension of an expiring payroll tax holiday when the Senate had already agreed to a shorter extension. "But let me tell you what, I think our members waged a good fight."

Picking this fight at this time almost left Republicans on the hook for an impending tax increase heading into an election year. The stakes were clear. With the Jan. 1 expiration of a Social Security tax break, 160 million Americans faced a tax increase that averaged $80 a month for someone earning $50,000 a year.

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The Senate, in a rare display of bipartisanship, voted 89 to 10 on Dec. 17 for a two-month extension of the tax holiday. That deal included a conservative win: a provision giving President Barack Obama 60 days to approve construction of the Keystone oil pipeline. If Obama declines to build the Canada to Texas pipeline he will have to certify that it is not in the nation's best interest-a risky proposition heading into November's elections.

Senate Republican Leader Mitch McConnell, known as a poker-faced negotiator, offered a high-five to a colleague in celebration of the deal.

But House Republicans balked, insisting on a year-long extension of the tax break. This gamble put a paycheck decrease for Americans in the middle of a congressional game of chicken. With a bipartisan vote to prevent the tax hike already secured, the Democrat-led Senate recessed for the holidays. House Republicans found themselves alone on Capitol Hill, scrambling to explain why they rejected a tax holiday they said they supported.

The Wall Street Journal's editorial board led the conservative backlash. "We wonder if [Republicans] might end up re-electing the President before the 2012 campaign even begins in earnest," stated the paper's editorial, which used words like "fiasco," "thoroughly botched," and "circular firing squad" to describe Republican efforts. "Republicans have also achieved the small miracle of letting Mr. Obama position himself as an election-year tax cutter."

Some of the 39 Republicans who backed the Senate extension also piled on, frustrated that the House GOP had ceded ground on the party's signature tax relief platform. Sen. Bob Corker, R- Tenn., called it "one more public policy blunder" while Sen. Scott Brown, R-Mass., said the House action "angers me." Both senators are up for reelection.

The cornered House surrendered Dec. 23 and agreed to the temporary extension. But the GOP's immediate hard line stance handed Democrats a public relations victory they can exploit throughout the campaign season.

Obama, who is enjoying a recent uptick in approval ratings, grafted the payroll tax fight into his campaign narrative of an obstructionist, do-nothing Congress. "What's happening right now is exactly why people just get so frustrated with Washington," said Obama, relishing the chance to play the role of a tax break defender.

Some Republicans say they will remain entrenched even if they do get beaten politically. "I don't care about my reelection," said Rep. Tom Reed, a freshmen Republican from New York. "We are going to do what is right for America." But is it right for America to pick a fight with Democrats who had gained the high ground by, for once, agreeing to cut taxes? With elections looming, Republicans should weigh political calculations as much as policy positions if they want to win the Senate and the White House in 2012, and enact their agenda in 2013.

Edward Lee Pitts
Edward Lee Pitts

Lee is WORLD's Washington Bureau chief. As a reporter for the Chattanooga Times Free Press, he was embedded with a National Guard unit in Iraq. He also once worked in the press office of Sen. Lamar Alexander.

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