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Boehner, Reid Come to Deal on Payroll Tax Holiday

Updated: 7:14 p.m.

Speaker John Boehner announced today that he has reached a deal with Senate Majority Leader Harry Reid (D-Nev.) to extend the payroll tax holiday for two months while working to find a compromise that could keep the tax cut extended until the end of 2012.

In a hastily called news conference, the Ohio Republican said that the House and Senate will take up the measure by unanimous consent Friday morning. He could not, however, guarantee that no Members would object and demand a roll call vote.

The deal comes after a week in which House Republicans were pummeled, not just by Democrats but some in their own party, for not agreeing to a Senate-passed deal that would extend the payroll tax holiday and unemployment benefits for two months while preventing a cut to doctors’ Medicare reimbursements and forcing President Barack Obama to decide on the Keystone XL pipeline within 60 days.

“It may not have been politically the smartest thing in the world,” Boehner said, “but let me tell you what: I think our Members waged a good fight. We were able to come to an agreement.”

Rep. Kevin Brady, a Texas Republican whom Boehner picked to be on the conference committee, summed up the beating his caucus had taken when he said, “I am willing to fight on, but in the end House Republicans felt like they were re-enacting the Alamo, with no reinforcements and our friends shooting at us.”

Democrats who had stood their ground praised the deal.

“This is good news, just in time for the holidays. … And I want to thank every American who raised your voice to remind folks in this town what this debate was all about. It was about you. And today, your voices made all the difference,” Obama said in a statement released this afternoon.

Senate Democrats touted their victory and announced they would appoint negotiators for the long-term extension to be worked out in the new year.

“I am grateful that the voices of reason have prevailed and Speaker Boehner has agreed to pass the Senate’s bipartisan compromise,” Reid said in a statement. “But there remain important differences between the parties on how to implement these policies, and it is critical that we protect middle-class families from a tax increase while we work them out.”

The move marks a significant retreat for the House GOP, which all week refused to approve any short-term extension and voted instead to create a conference committee to seek a one-year deal with Senate Democrats.

Democrats did not agree and left House Republicans sitting alone at the table.

Already out on a limb, House Republicans quickly found themselves on an island this afternoon after Senate Minority Leader Mitch McConnell (R-Ky.) called for Boehner to bring the Senate-passed bill to the floor.

McConnell’s statement followed a groundswell of Republicans calling on the House to compromise, starting with some GOP Senators, moving to the Wall Street Journal editorial page, and eventually GOP strategist Karl Rove and other prominent Republicans.

Boehner addressed his Conference on a phone call for about 10 minutes this evening to lay out the deal but took no questions.

If any Member objects and demands a roll call vote on the matter, Boehner said the vote would happen next week. But if Members sign off on the legislation, the unanimous consent move would happen Friday. The Senate is likely to pass the extension by unanimous consent as soon as it is presented with the House product.

Still, frustration among the Republican rank and file indicates that the deal is not yet a sure thing.

Some in the GOP freshman class, whom Democrats blamed for instigating the standoff, called for compromise, but others were frustrated by the way the payroll deal shook out.

After the deal was announced, Rep. Dennis Ross sent a flurry of angry tweets expressing his distaste for backroom dealmaking among party leaders. In an interview with Roll Call, the Florida Republican said that he would not obstruct the unanimous consent vote but that he thought the House should have voted on the McConnell-Reid plan earlier this week after the Senate passed it.

“At least we would have let the process work as it was intended to,” Ross said. “Sure, the Speaker would have been upset because he did not have all his Republicans on board, and we would have had to do some damage control on that. Instead we tried to preserve ourselves by not having a ‘no’ vote on lowering taxes.

“It’s very frustrating,” he added. “And of course we get blamed by our own party, saying we just don’t know how Washington works.”

House Republicans will put forth a new two-month bill with technical changes to extend the payroll tax cut, unemployment benefits and Medicare “doc fix” that would include a tweak to the original payroll language. The plan then would be for the House to approve the new short-term legislation and for Reid to pass the bill in the Senate by unanimous consent. As part of the deal, Reid would also name conferees to formally negotiate the long-term extension in the new year.

A Democratic aide explained that the nature of the technical change would be to address the concerns of payroll companies about the logistics of a two-month tax holiday: “Instead of a cap, there will be a tax to claw back any excess ‘tax break’ collected in the two months.”

Despite the difficulties that lie ahead, Democrats were happy to take a victory lap.

“There was a small group in the House that basically believed in brinksmanship and paralysis of government until they got their way on just about everything. … This was the first time they sort of had to wave the white flag,” Senate Democratic Vice Chairman Charles Schumer said in an interview on CNN.

But the New York Senator warned not to read too much into Republicans and Democrats coming to a deal now, expressing concern over the prospect of success on a long-term agreement.

“We will see if our House colleagues really have good faith, if they do what they did on their first bill, load it up with so many things that make it unpalatable to just about anybody, then we’ll know that they’re really not with good faith to get this done for the year,” Schumer said.

Democrats were the most vocal in their celebration after Boehner announced the agreement, but it was McConnell who had the most influence on today’s events. His statement of support for a short-term deal this morning seriously disrupted House Republicans’ insistence that only a full-year agreement was tenable. McConnell had negotiated the short-term agreement with Reid last Friday, and less than a week later, McConnell put public pressure on Boehner and his caucus. This provided a bipartisan, bicameral push against the increasingly isolated House GOP and even armed Obama with a talking point this afternoon.

In a statement following Boehner’s news conference, McConnell struck a diplomatic tone.

“While I am pleased that Senate Democrats and House Republicans have agreed to a solution that recognizes — and resolves — the legitimate concerns on both sides, I think it is crucial for everyone to realize that the larger goal is to move beyond a discussion of temporary assistance once and for all and toward a bipartisan plan to get our economy moving again, reform the tax code, and preserve and protect entitlements,” he said.

Jonathan Strong contributed to this report.

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