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Obama Gets a Lift From Tax Battle With Republicans

Jackie Calmes|The New York Times

After a long stretch of high unemployment, legislative turmoil and, in turn, slipping public approval, President Obama seemed to regain his political footing this week with the help of House Republicans, whose handling of a standoff over payroll taxes had even leading conservatives accusing them of bungling the politically charged issue.

John Foxx | Stockbyte | Getty Images

At stake were continued payroll tax cuts for 160 million workers and aid for several million long-term unemployed Americans that expire Dec. 31. The holiday brinkmanship over the issue recalled the December budget showdown 16 years ago between another first-term Democratic president, Bill Clinton, and a new Republican Congressional majority — a fight that capped their year of confrontation over the nation’s fiscal priorities by reviving Clinton politically as he began his re-election race.

But the impasse was not without risks for Obama. Democrats fretted that Obama’s vow to stay in Washington through Christmas and New Year’s to get a deal would backfire should he join his family in Hawaii before a resolution. Also, though House Republicans were bearing the brunt of criticism for the latest show of Washington dysfunction, Obama could be hurt if the tax break and jobless aid are not extended and the fragile economy sours, as nonpartisan economic forecasters have warned it will without the continued stimulus measures.

And while even other Republicans were predicting that the House Republicans would have to blink, or risk further political damage, the ugliness of the fight reminded Americans yet again of the seeming futility of Obama’s 2008 campaign promise to make Washington work as the year of his re-election race is upon him.

By Wednesday most lawmakers had scattered for the holidays. Yet party leaders remained behind, standing their ground and trying to shift blame to the other side. A 10-minute phone conversation between Obama and Speaker John Boehner was apparently fruitless, according to aides to both, and afterward each side described the call on its own terms.

Obama called Boehner shortly after noon and urged him to have the House reconsider and approve the compromise two-month extension of the payroll tax cut and unemployment assistance that Senate Democrats and Republicans overwhelmingly approved over the weekend with Obama’s support. House Republicans rejected that compromise on Tuesday and demanded negotiations toward a full-year measure to keep most workers’ Social Security payroll tax at 4.2 percent, down from 6.2 percent.

According to a White House account, Obama told Boehner the bipartisan Senate bill “is the only option to ensure that middle-class families aren’t hit with a tax hike in 10 days and gives both sides the time needed to work out a full-year solution.”

But Boehner reiterated that House Republicans want a full-year extension like they approved earlier this month, though their measure did not have the president’s or the Senate’s support, largely because of unrelated provisions that House Republicans attached and because it would cut unemployment aid from current levels.

The speaker told Obama that the House Republican majority “was elected to change the way Washington does business and that we should not waste the next 10 days simply because it is an inconvenient time of year,” a Boehner aide recounted. According to the aide, who declined to be identified discussing the private call, Boehner told Obama, “Let’s get this done today.”

Because the Senate compromise had offered a bipartisan way out of the knot until the parties could negotiate a long-term fix in January — the Senate passed the temporary measure by a vote of 89 to 10, with 39 Republicans in support — House Republicans by their rejection of it drew fire not only from Democrats but from Senate Republicans and conservative pundits.

They awoke to an editorial in The Wall Street Journal, a beacon of conservative thought, headlined “The G.O.P.’s Payroll Tax Fiasco” and blaming House Republicans for not only squandering their party’s advantage on tax issues but also potentially helping to re-elect Mr. Obama. The theme was echoed among conservatives in the blogosphere.

With Republicans criticizing each other, Obama stayed out of the public eye except for a brief Christmas shopping foray.

Boehner, who last week had tried unsuccessfully to get his party to compromise, held a news conference with the Republicans he had appointed as negotiators to a nonexistent legislative conference committee. They faced 10 empty chairs meant to represent the missing Democrats. “We’re here,” he said. “We’re ready to work.”

But as even some conservatives were pointing out, the House Republicans’ attempts to seize the political high ground by advocating for a full-year payroll tax cut are undercut by their shifting stands in the months leading up to the showdown.

Obama first proposed in September, as part of his larger jobs creation package, to extend for another year the two-percentage-point payroll tax cut that he and Congressional Republicans had agreed to last December. A year ago Republicans had agreed to the cut and continued unemployment compensation in 2011 only after Obama agreed to support an extension of the Bush-era tax cuts on high incomes, which were due to expire after 2010, for two years through 2012.

This fall, Republicans initially said they would oppose an extension, arguing against any further temporary stimulus measures. Then they said they would support an extension if the cost were offset by spending cuts, not the higher taxes on the wealthy that Mr. Obama proposed. When Obama hammered them in speeches around the country for risking a tax increase for most Americans to protect the wealthy few, many Republicans explained their opposition as a stand to protect Social Security’s revenues. Then they proposed their own payroll tax cut, which, like the Democrats’ version, would transfer general revenues into Social Security’s accounts to make up the loss.

On Wednesday, more Senate Republicans spoke out to urge House Republicans to accept the extension. Senator Bob Corker of Tennessee, who faces re-election in 2012, said on CNBC: “Are Republicans getting killed now in public opinion? There’s no question.” He echoed others, including Senators John McCain of Arizona and Lisa Murkowski of Alaska, in publicly calling on House Republicans to back down.

Senator Mitch McConnell, the Republican leader who negotiated the two-month compromise with the Senate majority leader, Harry Reid, has been largely silent, in effect standing by his deal and letting House Republicans stew in the controversy. McConnell believed he had Boehner’s backing for whatever deal he won, lawmakers say, but House Republicans rebelled when Boehner presented it to them on a Saturday afternoon conference call.

Polls this week suggest that the issue has helped Obama while keeping Congress’s ratings with the public at record lows.

Polls for The Washington Post-ABC News and for CNN showed nearly half of Americans approve of the job Obama is doing, up from percentages that have been in the low 40s this year except for a brief rise after the killing of Osama bin Laden. In the Post-ABC poll, Obama had reversed Republicans’ edge in an October poll on who is more trusted on the issue of taxes.

The results contrast with polls after the summer standoff over raising the nation’s debt limit, when both Obama and Republicans saw their support slide after reaching a deal in August. Obama’s slippage in part reflected defections from his party base; Democrats objected he had “caved” to secure Republicans’ support for an increase in the nation’s borrowing limit, without which the United States might have defaulted on its debts and provoked a global crisis.

But the August deal, in extending the debt limit through 2012, freed Obama to mount a more aggressive and populist pitch for his job creation agenda because the consequences of gridlock are not so dire. While advisers say the recent polls affirm that strategy is working, Obama’s ratings for his handling of the economy remain low.