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The House caves: GOP leaders accept two-month extension of payroll tax cut

Speaker of the House John Boehner conceded today that he had to cut some losses in this payroll tax cut extension debate.

House Republicans did an abrupt about-face on their previously dug-in heels today, and it now looks as certain as things ever do on Capitol Hill these days that 160 million Americans won't be hit with higher Social Security taxes.

Republicans are going to back down from their insistence that the payroll tax holiday last an entire year. Speaker John Boehner says he can persuade enough of his fellow House Republicans to go along with the two-month extension that the Senate passed last week. There's going to be some minor language changes to help small businesses cope with the taxes in this, and that's going to give House Republicans something to show for holding out most of the week for a year-long extension, but those are small tweaks, something that the Senate should be able to agree to in short order.

House Republicans were facing unrelenting pressure -- even from their own party members and their allies. Unlike the debt ceiling stalemate last summer, which involved government borrowing and big macroeconomic financial issues, this was an impasse over very personal individual money issues. That's 160 million American workers, how much money they're going to get in their paychecks, just two or three weeks from now. And when it gets that personal, the public pressure can be brutal on politicians.

Bob Moon: House Republicans just did an abrupt about-face on their previously dug-in heels today, and it now looks as certain as things ever do on Capitol Hill these days that 160 million Americans won't be hit with higher Social Security taxes.

Our D.C. bureau chief John Dimsdale joins us live. John, what happened?

John Dimsdale: Well, the House Republicans have backed down from their insistence that the payroll tax holiday last an entire year. They're going to accept instead a two-month extension just like the Senate approved, but with some conditions: some minor language changes to help small businesses cope with the tax reporting requirements under this short-term payroll tax extension. And that'll give the Republicans something to show for holding out most of the week for a yearlong extension. But you know, when announced the deal, House Speaker John Boehner was asked whether he had caved in a showdown with the Democrats, and he basically conceded he had to cut his losses.

John Boehner: You know sometimes, it's hard to do the right thing. And sometimes, it's politically difficult to do the right thing.

And he said that while he was fighting the good fight, it may not have been politically smart.

Moon: Yeah, they were just facing intense pressure, weren't they, John?

Dimsdale: Absolutely. Even their own party members, allies -- they were under such pressure not to hold up this tax cut. Unlike the debt ceiling stalemate last summer, which involved government borrowing and sort of big macroeconomic financial issues, this impasse had to do with some very personal individual money issues: How much will all those American workers get in their paychecks just two or three weeks from now? When it gets that personal, public pressure can be brutal on politicians.

Moon: So what's next? When can they get this wrapped up?

Dimsdale: Well, assuming enough House Republicans get behind Speaker Boehner, this can be sealed even in a matter of hours with some unanimous consent rules, the House can change the language in the Senate bill, send it back for senators to agree to, and then the president can sign it -- all by this weekend -- so that he could salvage some of his holiday vacation in Hawaii.

Moon: Marketplace's John Dimsdale in Washington, thanks.

Dimsdale: You're welcome.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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