Congress and the Payroll-Tax Cut: December Deadlock Continues

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Just so we’re all caught up, here’s what’s happened in the 2011 episode of Congress’s December Debacle so far: Everyone wants to extend the payroll-tax cut through next year. Democrats and Republicans disagree on the particulars. The Senate overwhelmingly passed an undesirable two-month extension so they could get out of Dodge and spend Christmas with the kids. The House was going to follow suit, but rank-and-file Republicans revolted, demanding a yearlong fix. On Tuesday, the House set aside the Senate proposal and sent it to conference, a process in which both chambers of Congress meet to work out their differences. But majority leader Harry Reid refused to call the Senate back to town. And House Speaker John Boehner says he won’t vote directly on the two-month extension because it’s a bad idea. Where does that leave things? In pretty much the same place they were Monday and, for that matter, for much of the past year: stuck.

President Obama traded barbs with Boehner Tuesday, as each man asked the other to set things right. “The clock is ticking. Time is running out,” Obama told reporters, describing the two-month extension as “the only viable way” to prevent the payroll-tax cut from expiring. “I need the President to help out,” Boehner responded in a press conference of his own. Neither seemed ready to give ground.

Here’s what Republicans have going for them: Legislating tax policy two months at a time really is a bad idea, so their demand for a full-year extension is sound. They may also credibly telegraph that they can’t deliver what the Democrats want because their members just won’t go for it. (That doesn’t necessarily make them look good, but Democrats may have trouble signaling that they’re totally unable to cave, given the events of the past year.) On mere appearances, the Republicans are the ones sticking it out in town while the Senate is off on vacation, so they look willing to work. Democrats, meanwhile, will say the onus still lies on House Republicans to pass the extension, no matter how impractical, because the 89-10 Senate vote was overwhelming. And they have absolutely nothing against a no-strings-attached full-year extension; it was Republican demands to attach language on the construction of a pipeline that held up negotiations in the first place.

So one of four things can basically happen from this point. Either the House swallows bile, bends to the will of the Senate and passes the two-month bill unconditionally; Senators return from their vacations to negotiate a new deal with the GOP; Democrats and Republicans simply let the tax cut expire and jostle for the coveted position of slightly less reviled political party while the economy suffers — a tax hike on 160 million Americans, the loss of unemployment benefits for millions, a 27% cut to doctors’ Medicare fees — in the aftermath; or the two parties manage the kind of 11th-hour, mutually unsatisfactory, gimmicky deal that’s already inspired so many ill feelings this year, either through conference committee or by some provision attached to the two-month extension that would set the stage for a new agreement when Congress returns in January. Happy holidays.