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Capitol impasse boosts chances of tax increase

The Senate is gone for the holidays and the House is packed to leave after rejecting an extension of the payroll tax cut. No negotiations are in sight to avoid a higher tax on Jan. 1.

December 20, 2011|By Lisa Mascaro and Kathleen Hennessey, Washington Bureau
  • Speaker John Boehner walks to the House floor.
Speaker John Boehner walks to the House floor. (Susan Walsh / Associated…)

Reporting from Washington — The Senate is gone for the holidays, the House packed up to leave, and as a result the chances that working Americans soon will see a tax increase jumped sharply.

The Capitol emptied to an eerie quiet on Tuesday, with no signs of negotiations toward a compromise that would save an expiring payroll tax break. As of Jan. 1, the 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. Doctors face an estimated 20% cut in Medicare payments.

Facing that unpleasant reality, Republicans fell into an angry family feud over their strategy, with several GOP senators who face reelection next year accusing their GOP House colleagues of acting irresponsibly. Senate Republicans had backed a bipartisan bill to preserve the tax cut for two months while Congress worked 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, 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 happened so many times this year, those voices were drowned out by the hard-charging House 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 on their cause, and is now withstanding grumbles from within his ranks and the arrows of Republican allies in the Senate who view this battle as a no-win.

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 last 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 predicted would yield little gain.

Finding compromise on a full-year deal would require consensus on the same 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 year-long tax cut package that both parties say they want. Unlike past tax deals, the GOP insists this one be paid for ? a position now shared by Democrats.

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 believe the GOP is in the uncomfortable position of blocking a tax increase on the affluent while allowing one on 160 million American workers. If the tax benefit were to lapse, they calculate Republicans will be blamed.

"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 his trip by another day, with aides saying he still held out hope that House Republicans would reconsider the Senate measure.

Boehner also tried to use his megaphone. At a news conference with members lined 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, as they voted to appoint negotiators to confer with the Senate to find common ground. They prefer the "Schoolhouse Rock" version of legislating ? honor the traditional process of merging differing House- and Senate-passed bills into one.

The Founding Fathers may have appreciated the GOP effort to stick to the constitutional rules, though it is unclear the public will the find it compelling. Democrats are readying campaign lines of attack and using the stalemate to raise campaign funds.

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