Congress approves tax cut bill, Obama signs legislation

House GOP arguments about the legislative process and what the "uncertainty" of a two-month extension would mean for businesses were unpersuasive, and Obama took the offensive.

Friday's House and Senate sessions were remarkable. Both chambers had essentially recessed for the holidays but leaders in both parties orchestrated passage of the short-term agreement under debate rules that would allow any individual member of Congress to derail the pact, at least for a time. None did.

The developments were a clear win for Obama. The payroll tax cut was the centerpiece of his three-month, campaign-style drive for jobs legislation that seems to have contributed to an uptick in his poll numbers — and taken a toll on those of congressional Republicans.

Obama, Republicans and congressional Democrats all said they preferred a one-year extension but the politics of achieving the goal, particularly the spending cuts and new fees required to pay for it, eluded them. All pledged to start working on that in January.

"There remain important differences between the parties on how to implement these policies, and it is critical that we protect middle-class families from a tax increase while we work them out," said Senate Majority Leader Reid, D-Nev.

House GOP arguments about the legislative process and what the "uncertainty" of a two-month extension would mean for businesses were unpersuasive. The two-month version's $33 billion cost will be covered by a .1 percentage point increase on guarantee fees on new home loans backed by mortgage giants Fannie Mae, Freddie Mac and Ginnie Mae — at a likely cost of about $17 a month for a person with a $200,000 mortgage.

"Has this place become so dysfunctional that even when we agree to things, we can't do it?" Obama said on Thursday. "Enough is enough."

The top Senate Republican, McConnell of Kentucky, was a driving force behind the final agreement, imploring Boehner to accept the deal that McConnell and Reid had struck last week and passed with overwhelming support in both parties.

Meanwhile, tea party-backed House Republicans began to abandon their leadership.

"I don't think that my constituents should have a tax increase because of Washington's dysfunction," freshman Rep. Sean Duffy, R-Wis., said.

If the cuts had expired as scheduled, 160 million workers would have seen tax increases and up to 2 million people without jobs for six months would start losing unemployment benefits averaging $300 a week. Doctors would have seen a 27 percent cut in their Medicare payments, the product of a 1997 cut that Congress has been unable to fix.

Even though GOP leaders like House Majority Leader Eric Cantor, R-Va., promised that the two sides could quickly iron out their differences, the truth is that it'll take intense talks to figure out both the spending cuts and fee increases required to finance the measure.

Just hours before he announced the breakthrough, Boehner had made the case for a yearlong extension. But on a brief late afternoon conference call, he informed his colleagues it was time to yield.

"He said that as your leader, you've in effect asked me to make decisions easy and difficult, and I'm making my decision right now," said Rep. Jack Kingston, R-Ga., paraphrasing Boehner's comments.

Kingston said the conference call lasted just minutes and Boehner did not give anyone time to respond.

There was still carping among tea party freshmen upset that GOP leaders had yielded.

"Even though there is plenty of evidence this is a bad deal for America ... the House has caved yet again to the president and Senate Democrats," Rep. Tim Huelskamp, R-Kan., said. "We were sent here with a clear set of instructions from the American people to put an end to business as usual in Washington, yet here we are being asked to sign off on yet another gimmick."