House Speaker John Boehner is facing yet another test of his leadership this week after House and Senate negotiators came up with an unexpected deal to extend the expiring payroll tax-cut holiday after weeks of butting heads over how to pay for the package, which includes an extension of unemployment insurance benefits for jobless workers, and avoids cuts to payments for doctors with Medicare patients.
The triple whammy, finalized late Wednesday night, does almost everything on Congress’s must-do list for the month, since the three programs are all set to expire on March 1st.
But the compromise also comes with a price, specifically $100 billion in lost revenue from payroll taxes that will not be offset with cuts elsewhere in the federal budget. Although an additional $50 billion in new spending is paid for from cuts to some Democratic priorities, the remaining $100 billion gap has grassroots activists fuming-mad, and some House conservatives hinting that, yet again, they may bolt from their leader when the package comes up for a vote later this week.
Whether Boehner can marshal his forces together for the vote seems an open question among Democrats negotiating with him.
“We’ve seen this play before. We sincerely hope that when Mr. Boehner emerges from his conference there is unanimity on that side and that a deal will have been struck,” said Rep. John Larson, the chairman of the Democratic conference. “As the Irish say, it’s a long way to Tipperary.”
Put more succinctly, a senior Democratic aide said, “There’s never any confidence on our side that he can build consensus in his conference.”
Even as the final details of the deal were negotiated, Boehner said Wednesday that there was “an agreement in principle” on the package. Swift passage would be a much-needed vote of confidence from the caucus and show that House Republicans are finally willing to follow their leader. It also would let Republicans get the issue behind them and avoid a repeat of an embarrassing standoff last December that put Democrats in the unusual position of arguing to cut taxes, while Republicans blocked the measure and left Boehner at the altar negotiating with Democratic leaders by himself.
“We were not going to allow the Democrats to continue to play political games and allow taxes to go up for working Americans,” Boehner said Wednesday after meeting with the House GOP leadership. “So we made a decision to bring them to the table so that the games would stop and we would get this work done.”
An aide with knowledge of the latest round of negotiations said, “It’s a bad issue for Republicans, and they just want it over with.”
Although the deal is expected to pass the House, signs of possible trouble popped up Wednesday among conservatives even before the final deal was reached, when House Budget Committee Chairman Paul Ryan, a key voice among fiscal conservatives, told WLS radio in Chicago that the missing offsets were splitting the caucus.
“Members on our side of the aisle are divided on this question. I personally have a problem with what happens with the Social Security trust fund. So people are divided on this; the Democrats agreed to it; I’d say I don’t really know what the number of Republicans are that agree to it.”
Rep. Michele Bachmann also raised objections to the temporary tax-cut extension in an interview with MSNBC. “I don’t think it’s the right way to go; I think it’s a temporary gimmick and, let’s face it, this payroll fund was established specifically to be a revenue stream to fund Social Security, so let’s leave that.”
The greatest danger, though, could come from the grassroots, where activists say they’re angry and frustrated by what they see as one step back for every two steps forward that Republicans make toward reining in the ballooning federal deficit.
“When you tell me you can’t find an offset for this, that’s an insult,” said Tom Zawistowski, the president of the Ohio Liberty Council. “We understand there is political reality, but in our reality we are losing ground and we already understand that we have no ground to lose.”
Zawistowski said his members need to see the details of the final proposal, but they would likely push back on it, noting that the proposed 10-month plan also fails to give businesses the certainty they’re looking for.
But support—and salvation—for the agreement could come from a group of fiscal conservatives who philosophically do not believe new tax cuts, like the payroll tax-cut extension, need to be offset with spending cuts.
“There is this effort to say tax cuts are spending—it’s not the same beast. It’s our money to begin with,” said Max Pappas, vice president of public policy and government affairs for FreedomWorks. “There is a famous line by the economist Milton Friedman where he said, ‘Any tax cut is a good tax cut.’ We’ll take it, but of course it would be nice if they would also reduce spending at the same time.”
But Zawistowski said that line of reasoning probably would not fly for Boehner and other Republicans back home in their districts.
“Two plus two equals four, and anybody who says different isn’t telling the truth,” he said. “We either have the money in our wallet when we walk up to the counter to pay or we don’t.”