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GOP Leaders Reject Payroll Tax Deal

A year-end deal to extend a popular tax cut and unemployment benefits collapsed in the span of 48 hours this weekend as the House GOP rejected en masse an agreement that had the blessing of Senate Minority Leader Mitch McConnell and most Senate Republicans.

The Kentucky Republican seemed to think that the two-month extension he forged with Majority Leader Harry Reid (D-Nev.) that overwhelmingly passed the Senate on Saturday would ultimately pass the House.

But Speaker John Boehner (R-Ohio), who had regularly communicated with McConnell as the deal was crafted, ultimately walked away.

After House Members overwhelmingly balked in a rowdy Saturday conference call, even McConnell seemed to back away from the deal he himself had brokered.

“The House and the president both want a full-year extension,” a McConnell spokesman said Sunday. “The best way to resolve the difference between the two-month extension and the full-year bill — and provide certainty for job creators, employees and the long-term unemployed — is through regular order, as the Speaker suggested.”

Some Republicans said Boehner seemed to indicate on the conference call with Members that he could support the deal, a claim his office denied. House Majority Leader Eric Cantor (R-Va.), Majority Whip Kevin McCarthy (R-Calif.) and Republican Conference Chairman Jeb Hensarling (Texas) stated that the Conference could do better, according to a Republican on the call.

Whether or not Boehner had indicated support in private, the Speaker on Sunday morning shot down any hope that the plan could pass his chamber.

“I believe that two months is just kicking the can down the road,” the Ohio Republican said on NBC’s “Meet the Press.” “It’s time to just stop, do our work, resolve our differences and extend this for one year.”

House leadership announced Saturday that the chamber would hold a vote Monday on the compromise, but on Sunday, Senate Democratic aides said they had been informed there would not be a vote on the deal after all.

The only clear thing Sunday afternoon was that nobody knew exactly how the standoff would end. Although the Senate sent a bipartisan message with its 89-10 Saturday vote, GOP aides said the House will send the Senate an amended bill — most likely a yearlong extension of the tax cuts and benefits — or move the bill to conference, where the chambers can resolve their differences. When votes might occur had not been announced as of Sunday afternoon, however.

The disconnect between House and Senate Republican leaders was apparent this weekend, but it was unclear whether McConnell moved on the deal knowing House GOP support was tenuous or whether Boehner overpromised and then had to reverse course after facing an outraged caucus Saturday.

Friday night, when McConnell and Reid told their respective conferences about the agreement, McConnell was optimistic about the bill’s prospects and almost gleeful of the position Republicans had put themselves in.

When asked Friday night whether he had received assurances from Boehner that the short-term extension would pass, McConnell did not give an explicit “yes” but seemed to indicate things were in good shape.

“I’m optimistic that we’re going to do well in the morning, and obviously I keep the Speaker informed as to what I’m doing,” McConnell said as he left the Capitol.

The 48-hour tectonic shift is indicative of either a miscommunication between Congress’ two top Republicans or a miscalculation on Boehner’s part that he would be able to rally enough votes. Boehner had told McConnell and Reid to come up with a solution.

In a Sunday interview, Rep. Tom Cole gave McConnell credit for winning concessions on the Keystone XL pipeline project language included in the deal. But the Oklahoma Republican said that because Keystone has been such a focal point in the debate, Senate leaders likely thought the House would vote for any plan that included it.

“In that regard he got a great victory, but the two-month thing is what really sticks in the throat of our people,” Cole said. To send the House this bill is “either tone-deaf or it’s simply because they were weary and wanted to go home.”

Senate Democrats appeared in no hurry Sunday to call their Members back to take up whatever bill the House might produce this week. Instead, they touted the broad bipartisan support for their own legislation. Eighty-nine Senators voted in favor of the two-month deal that would extend current law on payroll, unemployment and the Medicare doc fix, including every Member of the GOP leadership team.

“If Speaker Boehner refuses to vote on the bipartisan compromise that passed the Senate with 89 votes, Republicans will be forcing a thousand-dollar tax increase on middle class families on January 1st,” Reid said in a statement.

White House spokesman Dan Pfeiffer said in a statement Sunday: “If House Republicans refuse to pass this bipartisan bill to extend the payroll tax cut, there will be a significant tax increase on 160 million hardworking Americans in 13 days that would damage the economy and job growth. After months of opposition, we are glad that Republicans were finally showing a willingness to not raise taxes on middle class families. As the President said yesterday, it is inexcusable to do anything less than extend this tax cut for the entire year, and Congress must work on a one year deal. But they should pass the two month extension now to avoid a devastating tax hike from hitting the middle class in just 13 days.”

House Republicans opened the door for Democrats to rehash their favorite narratives, including that the tea party bloc in the GOP has overpowered the establishment’s ability to govern. And it likely was a welcome opportunity, given that many Senate Democrats had been frustrated both that a longer deal could not be reached and that the strategies employed by leadership of part of its endgame – including threatening to hold up a sweeping $1 trillion omnibus spending bill – made them appear to be threatening a government shutdown.

“This is a test of whether the House Republicans are fit to govern, and it is a make-or-break moment for John Boehner’s speakership,” said Senate Democratic Conference Vice Chairman Charles Schumer (N.Y.). “You cannot let a small group at the extreme resort to brinksmanship every time there is a major national issue and try to dictate every move this nation makes.”

House Minority Leader Nancy Pelosi joined the chorus Sunday, calling on Boehner to bring the Senate’s bill to the floor “immediately.”

“By holding up this bipartisan compromise, Tea Party House Republicans are walking away once again, showing their extremism and clearly demonstrating that they never intended to give the middle class a tax cut,” the California Democrat said.