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House GOP yields on tax cut

Members feared political backlash; accord will bring 2-month extension

Joshua Roberts/Bloomberg

John Boehner, House speaker and an Ohio Republican, told of a compromise on the payroll tax cut extension. Some GOP lawmakers feared voter backlash next year if a deal was not achieved.

WASHINGTON - Bowing under intense pressure from members of their own party, House Republican leaders agreed yesterday to accept a temporary extension of the payroll tax cut, beating a hasty retreat from a showdown that the GOP increasingly saw as a threat to their election opportunities next year.

Under a deal reached between House and Senate leaders, the House will now approve as early as today the two-month extension of a payroll tax holiday and unemployment benefits approved by the Senate last Saturday, and the Senate will appoint members of a House-Senate conference committee to negotiate legislation to extend both benefits through 2012.

House Republicans - who rejected an almost identical deal Tuesday - collapsed under the political rubble that accumulated over the week, much of it from their own party, worried that the blockade would do serious damage to appeal to voters.

Congressional aides suggested the measure would be passed on a voice vote by a handful of legislators. If some Republicans object to the process, House leaders could call the full House back next week before the tax cut expires Jan. 1.

The House speaker, John A. Boehner, who was determined to put the issue behind his party, announced the decision over the phone to members yesterday and did not permit the usual back and forth that is common on such calls, enraging many of them.

After his conversation with lawmakers, the speaker conceded to reporters that it might not have been “politically the smartest thing in the world’’ for House Republicans to put themselves between a tax cut and the 160 million US workers who would benefit from it, and to allow President Obama and congressional Democrats to seize the momentum on the issue.

The deal ended a partisan fight that threatened to keep Congress and Obama in town through Christmas and was just the latest of the bitter battles on fiscal policy involving House conservatives, Obama, and the Democrat-controlled Senate.

Under the deal, the employee’s share of the Social Security payroll tax will stay at the current level, 4.2 percent of wages, through Feb. 29. In the absence of congressional action, it would revert to the usual 6.2 percent next month. The government will also continue paying unemployment insurance benefits under current policy through February. Without congressional action, many of the long-term unemployed would begin losing benefits next month.

In addition, under the deal, Medicare will continue paying doctors at current rates for two months, averting a 27 percent cut that is slated for Jan. 1.

The new deal includes minor adjustments to make it easier for small businesses to cope with the tax changes and prevents manipulation of an employee’s pay should the tax cut extension fail to go beyond two months.

Obama, who has reaped political benefits from the standoff, welcomed the outcome.

“This is good news, just in time for the holidays,’’ he said in a statement. “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.’’

In the end, the agreement seemed a clear victory for Obama and the Democrats. They managed to change the narrative from one about Obama making a concession - he agreed to a provision in the bill to speed the approval process for an oil pipeline - to one about stonewalling House Republicans.

Democrats have been quick to exploit the issue. The Democratic Congressional Campaign Committee this week unleashed automated phone calls, some of which were recorded by the Democratic strategist James Carville, in the districts of 20 targeted House Republicans.

The push to find a quick resolution was touched off yesterday by Senator Mitch McConnell of Kentucky, the GOP leader, who had negotiated the two-month extension and urged the House to accept a temporary continuation of the tax cut and extend unemployment pay as long as Senate Democrats committed to opening negotiations quickly over a yearlong agreement.

“House Republicans sensibly want greater certainty about the duration of these provisions, while Senate Democrats want more time to negotiate the terms,’’ McConnell said. “We can and should do both.’’

After McConnell released his statement yesterday, a few House freshmen began to crumble.

“I’m calling on GOP leadership to immediately bring up the Senate’s two-month extension for an up or down vote,’’ said Representative Sean Duffy of Wisconsin, who voted against the deal earlier in the week.

After the McConnell statement was released, Boehner met with Representative Eric Cantor of Virginia, the majority leader, and the eight negotiators he picked for a conference committee, telling them of his decision, according to Republican aides. His staff then presented a proposal to Senator Harry Reid, a Nevada Democrat.

The agreement is likely to be only a truce in the battle.

“I look forward to appointing members of my caucus to continue negotiations towards a yearlong agreement,’’ Reid said. “Two months is not a long time, and I expect the negotiators to work expeditiously to forge yearlong extensions.’’

Material from the Washington Post was used in this report.

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