Congressional Republicans have a standard negotiating tactic, which has proven effective several times over the last year: hold the economy hostage until Democrats agree to capitulate on the major dispute of the day. The most notable example of this was last summer’s debt-ceiling fiasco.
But when it comes to the payroll tax break, the GOP simply couldn’t play the same game — Democrats never believed their opponents would support a middle-class tax increase in an election year, denying Republicans any leverage. Indeed, it was arguably the first time in this Congress where Dems felt like they had the upper hand — because they did.
As Tricia noted earlier, it was this advantage that helped produce a tentative deal on a larger payroll tax-break package.
Members of a House-Senate committee charged with writing a measure to extend a payroll tax reduction and provide added unemployment benefits reached a tentative agreement Tuesday evening, with Republicans and Democrats claiming a degree of political victory in a fight with significant election-year implications.
One day after House Republican leaders said they would offer a bill to extend the $100 billion payroll tax rollback for millions of working Americans without requiring spending cuts to pay for it, the Congressional negotiators struck a broader deal that would also extend unemployment benefits and prevent a large cut in reimbursements to doctors who accept Medicare.
A vote on the measure would most likely happen by Friday, when Congress is set to recess for a week.
The agreement is not yet final, and could still fall apart, but officials on both sides of the aisle appeared confident overnight that the deal would come together and reach President Obama’s desk no later than the weekend.
Democrats proceeded under the assumption that, as was the case in December, the GOP’s posture would change as the deadline drew closer. That’s exactly what happened, with Republicans growing anxious as the prospect of a tax increase on 160 million Americans — one that the GOP would be blamed for — grew more serious.
As work on the final agreement wraps up, the debate now turns to which side made the most concessions, and whether the deal is any good.
On the latter, most economists seem to agree that a lapse in the payroll tax would have dealt the burgeoning economic recovery a swift blow at an inopportune time. The same is true of extended unemployment benefits. To that extent, this agreement, if approved, will bring a sigh of relief to many concerned about 2012 economic growth.
On the former, both parties had to accept some compromises, but it was Republicans who’d already surrendered on the most contentious point: GOP leaders agreed on Monday to accept the payroll tax break without paying for it. Once this component was in place, the larger deal was much easier to strike.









