U.S. Speaker Boehner surrenders in tax showdown

John Boehner

WASHINGTON,  (Reuters) – U.S. House of  Representatives Speaker John Boehner caved in to growing  criticism from within and outside his Republican Party, agreeing  yesterday to a short-term deal to extend a payroll tax cut for  160 million Americans.

John Boehner

In a dramatic reversal that appeared to end a standoff with  Democrats, Boehner told Senate Majority Leader Harry Reid he  would set a vote in the House on a Senate-passed two-month  extension of the tax cut and jobless benefits – key supports for  a fitful U.S. economic recovery.

The Republicans’ about-face contrasts with a year of  dominance in Congress in which their staunch opposition to  higher taxes and spending yielded a string of successes.

Their backpedalling this time handed a rare victory to  President Barack Obama and his fellow Democrats as well as  much-needed momentum going into the November 2012 election.

In the battle of optics, Boehner and the party that fights  for lower taxes found themselves being blamed for not helping  avert a tax hike for middle-class Americans come Dec. 31.

“We have fought the good fight. Why not do the right thing  for the American people even though it’s not exactly what we  want,” a deflated Boehner told a news conference after giving up  his push for a one-year deal that faced near impossible odds.

The House could hold a simple “voice vote” today that  requires only a few members to be present and frees Republicans  from having to cast politically difficult recorded votes. The  Senate would also vote today.

That procedure allows Boehner to push through the bill  despite opposition from his often fractious caucus in which Tea  Party fiscal conservatives wield outsized influence.

Boehner told members about Thursday’s deal in a muted  conference call in which they could ask no questions. In a  similar call last weekend, he faced an outcry from members who  opposed a short-term deal, forcing him to reject the Senate bill  and precipitating this week’s crisis.

Obama, who repeatedly used the bully pulpit of his office  this week to push Boehner to do a deal, said in a statement he  hoped Congress would keep working to “extend this tax cut and  unemployment insurance for all of 2012 without drama or delay.”

Under a deal agreed to by Boehner and Reid, both parties  will immediately appoint negotiators to forge the full-year deal  sought originally by Obama and most recently by House  Republicans who said a two-month fix created uncertainty.

The capitulation followed days of pressure on Boehner, from  fellow Republicans in the Senate and conservative circles and  from the White House and Democrats, who analysts said were  winning the messaging war.

But maybe most crucial for breaking the impasse on Thursday  was the intervention of Senate Republican leader Mitch  McConnell, who called on the House to pass a temporary extension  and then move to congressional negotiations on a payroll tax cut  that would extend through 2012.

The two sides are deadlocked over how to pay for a full-year  deal on extending the payroll tax cut, long-term unemployment  benefits and payments to doctors treating patients under the  Medicare healthcare system for the elderly.

To cover a portion of the nearly $200 billion price tag,  Democrats initially sought a surtax on the wealthiest Americans  while Republicans wanted to pay for it through spending cuts.