In The News

December 22, 2011

Obama Presses Boehner On Tax Impasse

By Janet Hook and Laura Meckler, Wall Street Journal

WASHINGTON—President Barack Obama on Wednesday inserted himself directly into the congressional impasse over legislation to avert a Jan. 1 tax increase, but there was no sign of a breakthrough as Republicans found themselves in disarray on one of their signature issues.

House Speaker John Boehner publicly gave little ground to the president or to growing pressure from fellow Republicans, many of whom see the standoff as damaging to their party.

In a 10-minute phone call with the Ohio Republican, Mr. Obama urged the House to approve a two-month extension of the current, lower tax rate, and promised to negotiate a longer extension in the new year, according to administration and congressional officials.

Mr. Boehner reiterated House GOP complaints that two months is too short for a tax-cut extension, and asked the president to lean on Senate Democrats to enter into another round of negotiations before year's end.

Absent action by Congress, Jan. 1 will bring an increase in the payroll tax to 6.2% from 4.2%, a cutoff of extended unemployment benefits and a steep drop in Medicare payments to doctors. Businesses that process payrolls have complained that the uncertainty is disrupting their operations.

The Senate, by a wide bipartisan margin, last weekend passed a two-month extension to allow time to negotiate a longer-term compromise, but the House rejected that deal on Monday.

With no new talks in sight, GOP presidential candidate Newt Gingrich and former GOP presidential nominee John McCain joined a growing number of Republicans who warned that the standoff could hurt the party.

The stalemate has laid bare disagreements between Republican leaders and tea-party-backed conservatives elected in 2010 who have pushed for a more confrontational strategy in their quest to change how Congress manages the nation's affairs.

Mr. Boehner, who had been prepared to advance the two-month deal until his conservative back-benchers rebelled, dismissed the idea that the debate was damaging his party's image.

"We are the party of lower taxes for the American people," Mr. Boehner told reporters.

Senate Minority Leader Mitch McConnell (R., Ky.), an architect of the two-month extension, was blindsided by Mr. Boehner's strategy and has been silent in recent days. But aides to Senate GOP leaders are fuming. "For better or worse this is a problem House Republicans have created and one they have to fix," said one aide.

There also were hints of unease among senior, more-centrist House Republicans. Mr. Boehner's push for further negotiations, risking a tax increase, is "not exactly 'Give me liberty or give me death,' " said one.

Rep. Charlie Dent (R.,Pa.) said that "if we can't get the Senate sign-off on a one-year extension soon—in the next few days—we're going to have to move quickly to extend the payroll tax for a duration of time less than a year,'' said Mr. Dent. "That may end up being two months."

Mr. Obama's call to Mr. Boehner was the first known communication between the two during the congressional standoff. In the call, Mr. Boehner argued that a compromise could be written before year end if Senate Democrats would agree to talks now.

The speaker told the president that fellow House Republicans were "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," said an aide to Mr. Boehner. "He said that our differences are not so great that we cannot pass a full-year bill by December 31st."

White House press secretary Jay Carney said there would be no talks: "The ball is in the House's court."

The White House worked to draw attention to the looming tax increase. A Twitter and email campaign asked Americans to submit messages about what $40—the tax cut for an average American per paycheck—means to them, and a White House official said more than 25,000 responses had been received in two days.

Pressure on House Republicans intensified Wednesday when The Wall Street Journal editorial page, an influential GOP voice, argued the GOP had mishandled the payroll-tax debate, even contributing to Mr. Obama's re-election bid in 2012. Mr. McCain posted a link to the editorial on his Twitter feed, saying, "WSJ is right on the mark here."

From the GOP campaign trail, Mr. Gingrich said he also favored a full-year extension of the tax cut and lambasted the Senate for failing to produce that. But he also said Mr. Boehner was fighting a losing battle.

"Incumbent presidents have enormous advantages," said Mr. Gingrich, who as House speaker lost budget battles to President Bill Clinton after two government shutdowns. "And what I think Republicans ought to do is what's right for America. They ought to do it calmly and pleasantly and happily."

—Jonathan Weisman contributed to this article.

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