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House Agrees Payroll Tax Deal as Republicans Cave in to Obama
John Boehner set to sign two-month extension on payroll tax cuts after pressure from president and Senate minority leader
Congressional Republicans have capitulated in the showdown over the payroll tax, handing Barack Obama an important victory going into election year.
House speaker John Boehner is set to sign an offer from Obama to accelerate negotiations. (Photograph: Evan Vucci/AP) John Boehner, the House Speaker, announced a full-scale retreat on Thursday evening after days of criticism from fellow Republicans, including Karl Rove and senator John McCain, who said his actions were hurting the party.
The decisive moment came when the Republican leader in the Senate, Mitch McConnell, withdrew his support for Boehner and sided with the White House, calling on Republicans in the House to support a bill to extend tax breaks.
As a result of McConnell's intervention, support for Boehner crumbled. As a face-saving exercise, Boehner claimed to have secured a concession – but it is no more than a minor procedural point.
About 160m Americans will now receive their tax breaks, worth an average of $20 a week, as usual in January and February.
It was the latest in a series of battles between the White House and Republicans in Congress this year that saw threats to close down the federal government. In all of the earlier ones, Obama came off second best, but not this time.
The victory for the White House will cheer a Democratic base which has watched with frustration as Obama caved in time and again to Republican pressure.
The bill is now expected to be passed by the House on Friday morning and signed into law by Obama before heading off on holiday. The president had delayed joining his family in Hawaii until the issue was resolved.
In a statement from the White House, Obama said: "This is good news, just in time for the holidays. This is the right thing to do to strengthen our families, grow our economy, and create new jobs. This is real money that will make a real difference in people's lives."
The bill was passed by the Senate on Saturday, with the backing of both Republicans and Democrats. The two-month extension is a compromise that allows them to negotiate after the holidays on a year-long deal.
Boehner, having initially agreed to back the bill, retreated on Sunday, faced with opposition by House members allied to the Tea Party movement. They demanded, in return for support for a one-year extension of the tax cuts, a series of concessions on spending cuts and on a controversial pipeline.
On Tuesday, House Republicans effectively voted to block the bill. The Wall Street Journal, normally a solid supporter of the Republicans, in a withering editorial, accused Boehner of helping Obama win re-election in November 2012.
As part of a face-saving exercise on Thursday evening Boehner claimed that, as a result of his actins, he had managed to secure from the Democratic leader in the Senate, Harry Reid, a promise to name members for a joint House-Senate conference to negotiate the year-long tax concessions.
"Senator Reid and I have reached an agreement that will ensure taxes do not increase for working families on January 1," Boehner said. Reid said he would have agreed to this anyway.
Boehner is unpopular with some of the rank-and-file members of Congress, particularly those leaning towards the Tea Party, and the tax debacle could bring closer a challenge to his leadership.
The tax breaks were introduced by Obama last year to help stimulate the US economy. If the bill was not passed by 31 December, American taxpayers face cuts in their pay of an average of $40 every two weeks and 1.3m people stand to lose unemployment benefit.
Earlier in the day, Obama, at a White House event organised to step up pressure on Boehner earlier on Thursday, described the standoff as "ridiculous", and paraded some of the 30,000 Americans who have written to the White House detailing the impact the tax rises would have on their lives. For some, the $40 is significant, meaning the loss of heating for almost half a week. For others, the impact is small but meaningful, from parents unable to take their children out for a pizza, to a man driving 200 miles a week to keep his father-in-law company in a nursing home.
McConnell's statement presented an even bigger setback for the House speaker. McConnell said working Americans "shouldn't face the uncertainty of a New Year's Day tax hike", and urged the House to pass the bill to avoid "any disruption in the payroll tax holiday".
The standoff with the House Republicans was an early Christmas gift for Obama. Democratic strategists decided months ago Obama would fight the next election portraying the Republicans as obstructionist. He took up this theme on Thursday, saying he would sign the tax bill immediately on receiving it from Congress, and the only thing stopping it was what he called a "faction" inside the Republican party.
"What's happening right now is exactly why people just get so frustrated with Washington. This is it: this is exactly why people get so frustrated," Obama said.
"This isn't a typical Democratic-versus-Republican issue. This is an issue where an overwhelming number of people in both parties agree. How can we not get that done? I mean, has this place become so dysfunctional that even when people agree to things we can't do it? It doesn't make any sense not to reach a deal."
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25 Comments so far
Show AllI have voted in most elections since I was eligible, but I am at the point where I don't know if I will any more, except maybe at the local level. I toy with the idea of just voting against whoever is in congress, but then you just end up voting for a person that belongs to the OTHER corrupt DC party in our two party scam of a national system. So does that really accomplish anything? Probably very little.
It will be interesting to see if Boner gets reelected. To me that man represents everything rotten in a politician. He doesn't even seem like a real human being, but some kind of sad, sick characterture. IMHO he is a shameless liar, a total a shill for the rich, a man with no honor. Every time I see him a little bit of vomit creeps up my throat.
He and his party (along with the Dems), have done more to ruin this country than any group of terrorists ever could.
I always vote but have not voted for a Dim for more than a decade and have never voted GOP in over forty years of voting. Except in states where top two primaries have been adopted, third party candidates are usually on the general election ballot. Although I feel good for voting third party, I feel bad when I see 95% of the electorate wasting their votes on Dims and the GOP.
I've only been down in NC for a few years now but so far I haven't seen much in the way of third party action in my neck of the woods.
with posse comitatus gutted, who will you vote for when the jackboots come to break in your door?
Hang in there NC-Tom. Both, the repub/tparty and Democratics need a house cleaning, and it's coming. The tparty arm of the repub party has to go, for certain, because of their staunch support and santification of the corporate elitists. Their base idea to cut spending was good but they stopped there. Can't, won't work. A budget needs revenue next to spending cuts. Your take on Boner is right on, shameless liar. Once we get a Democratic Congress, we'll clean house on them too.
Common Dreams why do you also perpetuate the lie that we are dealing with a "tax"? This reduction is NOT the reduction of a tax but the reduction of dedicated payroll deductions for SS and health INSURANCE. Shame on you. Shame on you Obama shills at CD!
Ewen Macaskill is nothing more than an across-the-pond shill perpetuating the other lie that Washington DC politics is broken and the parties can't agree on anything. The GOP tried and failed to get a "payroll tax holiday" for decades. It took trojan horse Obama to implement the "holiday" with the help of his Democratic Party rubber stamps in Congress.
Just as the GOP loves Obamacare, the GOP loves Obama's "tax holiday". In both cases they will continue to oppose both in order to keep their voter base from defecting while the Dims take heat for supporting these hallmark Obama programs that are designed to gut Medicare and Social Security.
I thought the deal struck was to increase certain mortage fees to offset the reduced SS revenues and the cost of the extended unemployment benefits. However this article says nothing about that. So did that end up being part of this deal?
Whatever the case, you're right -- there should be a firewall maintained between SS and the rest of the federal budget. Mixing the two is a recipe for mischief. I suspect they could offset this hit to SS revenues by just raising the SS deduction salary cap (currently around $105K) ... but, heaven forbid, that's not even on the table, because of course that would mean the 1% would have to actually start pulling their own weight. Can't have that.
The witholding cap is supposed to go up to $110K per year in 2012. If that cap were raised to say 200K wage earners would have to contribute a little less to SS and perhaps employers not at all! What I want to know is how will the net reduction in contributions to one's SS 'pot' eventually impact SS payments in the future when one retires? What JB has done really is to say its OK to underfund SS..a repub core belief anyway and one to which it appears Obama subscribes. This wonderful piece of theater reinforces all those myths that its a Dem v Repub 'battle' when really they are both intent on the same things. So what is happening unemployment benefits? All this to entertain and distract the easily distracted from what is to the wildly expanded power given to 'law enforcement' in terms of detention without trial and the absence of 'due process' . Sickening.
heres from July 2010 warning about this
http://www.retiredamericans.org/system/storage/24/cd/d/945/fact_sheet-budget-payroll_tax_final.pdf
Good point. I've wondered the same thing. No matter what they're stealing from the retirement benefit of the future recipient and BTW, why the big fight for this so called "holiday" for two months when Oliar and company did not lift a finger to help energy subsidies for the poor who they say they're helping? The whole thing reeks of a setup to fool the people and the people seem to be falling for it.
And the tax on mortgages is supposed to make up the shortfall? What a dream!
of course the repugs and the demos agree... the payfoll tax reduction is a way to underfund social security so that it can be privatized....the fight was just a big show...
By keeping the charade going the GOP will give Obama cover for "throwing in" Keystone pipeline and further Bush/Obama tax cut extensions to consummate the "deal". You don't need a crystal ball to forecast this stuff...just common sense.
~snip~ handing Barack Obama an important victory going into election year~snip~snip~ Republicans, including Karl Rove and senator John McCain, who said his actions were hurting the party~snip
hmm, anybody else beginning to think all this is more about the politicians than the people?
~snip~ a compromise that allows them to negotiate after the holidays on a year-long deal.~snip
hey all you groundlings out there--the excitement's just begun! we'll be back after this brief intermission!
Meanwhile back at the ranch...other sleazy regressive legislation is being passed that the media isn't even addressing . The media is following orders to focus all the attention on the "payroll tax cut" charade to distract voters' attention.
The absurdity of stealing money from social security in order to give people a tax break to spend buying Chinese crap at wal-mart was never seriously reported on and the only politician with credibility who has warned us about this has been Bernie Sanders.
I'll add that when Obama added the payroll tax cuts last year, they weren't even part of the Bush-era tax cuts; rather these were part of the expanded tax cuts Obama added to the Bush-era tax cuts. For so long, the Demobots were blaming Bush and Repubs for the Bush-era tax cuts and their effect on the national debt and cuts in social spending programs. Now they are silent in regards to Obama's tax cuts.
Today we get an extension on unemployment tied specifically to this impinging on Social Security. I am guessing it was the important aspect of the equation last year. Funny thing though the media didn't focus on it last year did they. The Bush tax cuts were just stocking stuffers. No wonder they can find bi-partisan agreement. It works well for both of the parties of the 01%. Once again they win and we lose.
I am guessing since they extended unemployment, they'll quietly kill the subsidies for low income heating subsidies when they get back in January. We'll continue to send aid to Israel but we can't help the poor and the elderly in this nation heat their homes in the winter.
This performance was brought to you by Wall Street.
The "overwhelming number of people in both parties agree" that Social Security needs to be further gutted as "an early Christmas gift to Obama."
Now get on your phones and vote for who gave the best performance as a corporate whore. Further charges will apply.
Before Obama, Social Security was just funded by Americans through payroll deductions and by employers with matching contributions and was a self-contained program. However, when Obama added the payroll tax cut, he swapped part of the payroll funding for funding by US tax dollars (or promises of them). The result is SS is now contributing to the national debt and makes it a legitimate target of deficit reduction talks (previously SS was part of the discussion but the talks were illegitimate). As others have noted, Corporate media ignores educating Americans on the impact these short term "tax cuts" have on long term social security. I was actually hoping the House Repubs would hold their ground on this one even though their intention was not saving SS. Even though the US can't afford it, Obama could have easily proposed the same tax cut using income taxes instead of SS taxes. This will be part of Obama's legacy.
"GOP 'caves' to 0."
tit for tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-tat-
.Am I expected to believe that Obama has had a sudden change of heart, not influenced in any way by the prospect of re-election, and is now revealing a complete about face in turning "against" the 1%? Is this why Common Dreams agrees to deliver this Macaskill piece characterizing this tax deal as a "victory" for Obama," as a "cave" by the republicans? The answer to this question is important to me, inasmuch as I don't see Obama as a democrat. To me, Obama is a republican. So it's hard for me to understand how republicans have "caved," when, they've caved to a republican?
Boehner is the new sacrifical lamb for Wall St.. I celebrate that the unemployed can look forward to paying their utility bills this winter. Thanks for that. But the phoney "payroll tax" thing is what's important to 01% and once again they got their Christmas Wish.
Where's the legislation on outlawing insider trading by congress? No action taken? To me that's important and should be passed before the next election. Where's Mr. Obama on that?
For now I am happy for the unemployed. And I don't wish to pick any other winners but them.
Yay! Obama managed to de-fund Social Security, and commondreams thinks we're all idiots who can't somehow figure this out! Yayyyy! What a great "victory"! I want more phony-ass "victories" like this! Yayyy!!! Like "Obamacare" was such a big huge titanic earth shattering "victory" as well! And OWS, my GOD!!! That's the biggest "victory" of all, perhaps in all of mankind's recorded history. Yes, a "victory" for all to see. Yep. Uh-huh. You betcha.