Deal Reached to Extend Payroll Tax Cut
JOHN KING, CNN ANCHOR: Good evening, everyone. Important breaking news tonight, a deal that gives you more money by extending the Social Security payroll tax cut for two more months. Speaker John Boehner, who just this morning said no, that House Republicans would only support a yearlong extension, retreated this afternoon, made the announcement just minutes ago.</s>REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: We have fought the fight, the good fight. But, you know, I talked to enough members over the last 24 hours who believe that, hey, listen, we don't like this two-month extension. We don't like this reporting problem in the Senate bill, and if you can get this fixed, why not do the right thing for the American people, even though it's not exactly what we want?</s>KING: The full details of this payroll tax deal, the compromise and the reaction still coming in. President Obama just put out a statement saying -- quote -- "For the past several weeks I have stated consistently it was critical that Congress not go home without preventing a tax increase on 160 million working Americans. Today, I congratulate members of Congress for ending the partisan stalemate by reaching an agreement that meets that test." More reaction coming in as well. Let's get the very latest on the details and the political fallout. Our senior congressional correspondent, Dana Bash, is with us, also our chief White House correspondent, Jessica Yellin. Dana, let's go to the Hill first. I know the House Republicans are saying we have a tweak in the language here to help small businesses, but this is cave with a capital C, no?</s>DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Oh, yes. And it's tweak with a little T., barely you can see the T. in tweak. There's no question that House Republicans gave in here. You could see it in the House speaker's demeanor. You could hear it in his voice. He all but gave a concession speech both on the politics and on the policy of this, policy meaning, as he said, we fought the good fight. There's no question that they were under intense pressure inside the Republican caucus from fellow Republicans in the Senate, from "The Wall Street Journal" editorial board and more importantly, I think, in the past 24 hours or so, John, from their own constituents. We're hearing from Republican sources that members of Congress left here yesterday, they went back home and they were hearing from your constituents what are you guys doing? We don't want to lose $1,000 from our paycheck on average, get this done, fix it. That's what they did.</s>KING: Dana, now what happens? Most of them have gone home. They can use a process called unanimous consent. As long as no one objects, you need one Democrat and one Republican in the House, one Democrat and one Republican in the Senate. When will that happen? Is there a possibility somebody could still throw a wrench in this?</s>BASH: There's always a possibility somebody could throw a wrench in this. And the ways things have gone this entire year, that would be an apt end to this year. But the likelihood is that it will happen tomorrow and the expectation is it will go through without having to have a formal roll call vote. I just got off the phone with one member of Congress who was on the conference call with the House speaker who said it was pretty clear that he's not going to take any revolt this time. He described the speaker as tired and ticked off, something he had never heard from the speaker before and he just said this is what we're going to do and this is the deal, the call lasted 10 minutes, he hung up, and that was it. It doesn't look like he's got a stomach for -- he's been through a lot from his own caucus and from everyone else. And the House speaker does not have the stomach to let this go any further. It's very likely going to pass tomorrow.</s>KING: Dana, stand by. Let's go to the other end of Pennsylvania Avenue. Jessica Yellin, just this morning the president was out surrounding himself, as the president has the bully pulpit and the advantage to do, with some real people, saying these people are going to lose on average $40 a paycheck. Tonight the president is celebrating. Interestingly, from a political standpoint he decided to do it by issuing a statement, not by coming out. Why?</s>JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, this isn't done yet, John. So I think they're going to hold their fire until it's all signed, sealed and delivered. But I will tell you the fact that Dana just reported that Speaker Boehner is not going to take any revolts is going to be music to the ears of everybody right here inside the West Wing, because one of the frustrations, time and again, has been that every time they feel that they have come close to a deal with Speaker Boehner, it's sort of been Lucy and the football and Charlie Brown. All of a sudden it's been snatched away and things fall apart because he caves to something that happens in his caucus that's unexpected. So they don't ever want to get ahead of the story and want to wait and see that the vote happens and it's done before they actually celebrate and pop that champagne cork. So I think they're just being cautious at this point. But this sounds like, you know, the speaker's really going to hold firm on this one. I wouldn't be surprised if we do hear from the president after things are done, John.</s>KING: Jess, from a White House perspective and the politics of this, one of the reasons the Republicans took their position at first is that many Republicans thought the president would blink. And let's be honest. In the past, sometimes he has blinked. From a political perspective, what does team Obama think is the biggest lesson for them here in victory tonight?</s>YELLIN: Well, in this instance, first of all, they, you know, this is their point of view, they don't think they have blinked in the past. Inside the bubble, or inside their views they have their own view of things. But in this instance, there was no question that they had the right policy on their side, you know, a very clear question of a tax increase for the American people that was going to hit everyone in the pocketbook. And then they had Democrats and Republicans on their side and even Senator Mitch McConnell. When you have the guy who was the president's archenemy all year politically siding with the president all day today and through this issue, it was not even a hard call for the president to hold firm. I will tell you one big game changer, one game changer, if you will, was when the speaker called the president this morning, he asked, would you send your people up to Capitol Hill to negotiate with me today? And the president said, no, I'm not negotiating with you. You have to talk to Speaker Reid's office. And then Speaker Boehner's office realized they had nowhere to turn, they had to deal with Speaker Reid. Then you had Mitch McConnell coming out and saying I'm not with you. And so he really had no space to maneuver.</s>KING: Jessica Yellin at the White House, Dana Bash on Capitol Hill, we will check back with both of you throughout the hour as news warrants. Joining us now for some perspective, our senior analyst David Gergen. David, you have been saying all week the Republicans were in an untenable position. Speaker Boehner over the weekend, maybe he heard from his conservative members saying you can't accept this deal. What do you believe was the key in the speaker going back to the very same members and saying, we're taking it now?</s>DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, John, as you know, there's this whole Kenny Rogers line that you have to know when to hold them and when to fold them, and it became increasingly obvious to Speaker Boehner he had to fold. He was not only under pressure from constituents back home, but there was intense pressure coming from senior Republicans who believe this whole thing has been so botched that it has not only, you know, soured the American people once again on Congress and Washington, but it's left the impression that the real problem in a broken Washington is a Republican Party that is held hostage by the Tea Party. And that was playing into a narrative that was very powerful for the president and Democrats next fall. I think it's the political reality of what they were facing that I think eventually forced their hands. Even though they -- as you and I talked about earlier this week on Monday on the merits they had a pretty good case for a yearlong. That's what President Obama wanted was a yearlong tax extension. But on the politics, they were playing a terrible hand and they had to fold.</s>KING: Taxes will not go up in nine days, David. The American people will not have their payroll taxes go up. When those credit card bill from the holiday shopping come, they won't look at their check and say, whoa, I'm a little short of what I thought I was going to have in there. Is this forgotten or will the price the Republicans paid this week carry over?</s>GERGEN: That's a really good question, John. My sense is that the issue itself will be forgotten pretty quickly, but, symbolically, it had an importance that went beyond the merits or the immediacy. And that is coming right at the end of a really rotten year in Washington, it left the impression right at end that the real problem is the Tea Party and the extremism on the Republican side. Even though Democrats deserve an awful lot of blame for what happened, what went wrong in Washington this year, there's no question that the year ended on a down note for Republicans. Even as they fold, there is symbolically, I think, some lasting damage. And overall, you have to say, if you look at overall picture over the last three or four months this has been a story, the bigger story is the resurrection of President Obama and Democratic hope for 2012.</s>KING: There's no doubt about that. If you look at -- again, it's a long way off, and a lot can happen, but if you look at the president's approval rating, especially among middle-class Americans, it's up, and his overall approval rating is inching up. We're talking in 2011, still approaching the new year. We will see what happens. David, let me ask you this. A bit of a contrarian view or a contrarian question, you heard Dana Bash reporting there Speaker Boehner was ticked off, he was tired. He essentially told those freshman members who at times have pulled him along this year, this time you're listening to me. Might there be an important lesson for them there? Could Speaker Boehner actually benefit from this in the long run? Next time around, can he say we're not doing that again?</s>GERGEN: I think so. And I think he's going to get tougher because Speaker Boehner was put in a really awkward position. Not only were the Republicans getting hurt but there was a real chance Republican losses next fall would be larger than he expected, in which case Speaker Boehner's job might be in question as you well know. The other issue here that I think has really gotten interesting is having made such an important argument, are we ever going to be able to return payroll taxes to their old levels? You know, this does have a lot to do with the viability of Social Security. But if we are going to act like you can't raise taxes $1,000 in order to pay for Social Security, we have got a more severe problem than we ever thought we had with the deficits.</s>KING: Absolutely right. They have a severe problem that the only way to do this, the only way out of this -- the Bush tax cuts are about to expire. Now you have this payroll tax holiday on the books and it's become a huge political issue. Like you say, the only way out of this is to do big comprehensive tax reform and try to get done before a presidential election. David Gergen, appreciate your insights tonight. We just want to one quick moment for those of you watching at home, again, this is not just a Washington political fight. This is money, would have been money out of your wallet. We assume now the deal's going to go through. We will watch it tomorrow and you can watch it with us. But if now this compromise holds, $35,000 you make a year, that means you will keep that $700-a-year payroll tax holiday you have been getting in recent years, instead of having your taxes go up $27 a paycheck. If you make $50,000 a year, let's assume now that means you will keep that $1,000 payroll tax holiday next year, instead of losing nearly $40 a paycheck. This is the number the White House is focusing on most. Those making about 75 grand, you will keep next year about $60 a paycheck. That's a paycheck every two weeks is the calculation the White House makes there. If you make more money, obviously, you will save more money. Still ahead here, an exclusive talk with Congresswoman Michele Bachmann, who says she's sensing something in Iowa that will shock the rest of us. Plus, continuing coverage of tonight's breaking news, this deal now to extend your payroll tax cuts.