House Revolt on Payroll-Tax Cut Throws Congress into Familiar Late-December Chaos

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Andrew Harrer / Bloomberg via Getty Images

Speaker of the House John Boehner at a news conference in Washington, D.C., on Monday, Dec. 19, 2011.

Congress is an institution built on traditions: bean soup in the Senate cafeteria; two-century-old desks; strict legislative procedures. But during the presidency of Barack Obama, Congress has added one more, less beloved ritual: the annual yuletide negotiating meltdown that leaves its members stranded in Washington in late December.

Late last week, however, everything seemed on track for a relatively smooth exit. On Friday, the House passed a $1 trillion appropriations bill to fund the federal government through September of next year, one of the longer-term spending agreements it’s been able to reach in recent months. The Senate banged it through on Saturday, sending it to the President’s desk and averting a government shutdown. And an extension of the payroll-tax cut, a stimulative measure favored by both parties, looked as if it was headed for passage as well.

After an impasse over how to pay for it and whether language dictating the construction of the Keystone XL pipeline should be included, Democrats and Republicans finally struck a deal that would have at least sent members home for the holidays: a two-month extension of the tax cut, a Medicare-reimbursement fix, extended long-term-unemployment benefits and an edict that President Obama must approve the pipeline within 60 days or declare it against the national interest. That would have punted the difficult debate into the election year and put Obama in a very tough spot. So, with reported praise from House Speaker John Boehner and the blessing of Senate minority leader Mitch McConnell, the Senate passed the measure 89-10 on Saturday. Done deal, right?

Not so fast. On a Saturday conference call between House Republican leaders and their members, everything fell apart. The conservative rank and file rejected the terms, and by Sunday, Boehner was denouncing the bill and McConnell had retracted his support for a deal he himself had brokered and voted for in the prior 24 hours. “I believe that two months is just kicking the can down the road,” Boehner said Sunday on Meet the Press, suggesting a joint-chamber conference committee to reconcile remaining differences and pass a full-year extension. To show how serious he was, Boehner scheduled for Monday a vote on the Senate bill, which is expected to fail.

The power of the House’s large conservative bloc is hardly news — it pulled Boehner back from a grand deficit bargain with Obama in the summer and has frequently set the boundaries of various budget debates throughout the past year, winning unprecedented cuts to discretionary spending. But the weekend’s revolt was something new: the House rank and file exercised its veto power after a deal was already in motion, setting up the leadership for an embarrassing moment of seeming impotence. Boehner insists he never pledged to support the bill, only to bring it to a vote, and that he raised concerns about the two-month time frame from the outset.

Democrats seized on the chaos. “Will House Republicans Allow Taxes to Go Up on 160 Million Americans?” blared a White House e-mail. “Trying to negotiate with Speaker Boehner is like trying to nail Jell-O to the wall,” New York Senator Chuck Schumer told MSNBC. Senate Democrats are trying to force Republicans’ hand. “We have no plans to change the schedule set by Senators McConnell and Reid, which is that the Senate is adjourned for the year,” said a spokesman for majority leader Harry Reid. “There is no reason for the House to fail to pass this bipartisan bill or keep wasting time passing bills that cannot pass the Senate.”

Even vulnerable Republicans in the Senate are uneasy. Massachusetts Senator Scott Brown issued a statement Monday calling the House’s actions “irresponsible and wrong.”

The policy stakes are high. Failure to extend the payroll-tax cut could shrink growth by as much as 1% next year, according to Mark Zandi of Moody’s Analytics. And while some version of the package is still overwhelmingly likely to pass — everyone favors it, and in the past, Congress’s desire to adjourn for the holidays has been a powerful motivator — the collapse of this weekend’s deal may be a troubling omen.

Late-December histrionics are now the norm. In 2009, it was health reform that kept the Senate in session late on Christmas Eve; last year, it was an extension of Bush-era tax rates (not to mention the same payroll-tax cut that’s now being debated) that had members of Congress putting in overtime. While the ability of the two parties to functionally negotiate anything but last-minute desperation agreements has eroded, so too has the ability of the Republican leadership to negotiate on behalf of its members at all.

Top Republicans are now making a very solid case that it’s insane to legislate tax rates two months at a time. (Both parties have tried and failed to pass a full-year extension.) “It’s time to stop the nonsense,” Boehner said Monday. Few would argue with that. But it seems the power to help stop it is slipping through his fingers.