Why the GOP caved in the payroll tax fight: 4 theories

Republicans are easing up on their opposition to the Democrats' push to extend a tax break for 160 million Americans. What made the GOP blink?

In an apparent win for Democrats, Senate Minority Leader Mitch McConnell (R-Ky.) said on Wednesday that the GOP would probably support an extension of the payroll tax cut.
(Image credit: Chip Somodevilla/Getty Images)

Senate Minority Leader Mitch McConnell essentially conceded on Wednesday that Republicans would support President Obama's proposed extension of the payroll tax holiday. The 6.2 percent Social Security payroll tax was reduced to 4.2 percent in 2011 — and now it looks like the measure will be repeated in 2012. However, Republicans want to pay for it by freezing the wages of federal workers and cutting government jobs, not by hiking taxes on millionaires, as Democrats prefer. McConnell says Senate Republicans "put aside their misgivings" not because they believe, as Obama does, that the move will stimulate the economy, but because they want to "give some relief to struggling workers." Still, this is a big shift by the GOP. What changed Republicans' minds? Here, four theories:

1. Democrats outmaneuvered them

Democrats framed this issue in a way Republicans just couldn't beat, says Greg Sargent at The Washington Post. Team Obama hammered the idea that "not extending the payroll tax cut would constitute a tax hike on working people that would be harmful to the recovery." Republicans faced a stark choice: Fight Obama and protect "a tiny group of their wealthy constituents" at the expense of "a huge number of their working constituents," or cave. Heading into an election about the economy and jobs, the GOP had no choice but to back down.

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2. You can't raise taxes at Christmas

Christmas is in the air, says Kelly Phillips Erb at Forbes, and that is not the time to tell people you're hiking their tax bill. President Obama knows that, which is why he kept "invok[ing] the holiday spirit" while stumping in recent days. "Don't be a Grinch," Obama said. "Don't raise taxes on Americans during the holidays." The line played well in Scranton, Pa., where unemployment is especially high. For the GOP, digging in against Obama "risks alienating more than 160 million Americans who benefited" from the payroll tax cut this year.

3. The GOP finally remembered what it stands for

The only odd thing about the GOP's position on the payroll tax cut, says National Review in an editorial, is that they ever resisted the idea in the first place. "For more than a generation, the Republican Party has stood for cutting tax rates and opposing increased tax rates." Sticking to the "odd position" of opposing the Democrats would only have risked eroding the GOP's "traditional advantage on taxes, and for no good reason."

4. They're using this is a bargaining chip to cut spending

McConnell isn't waving a white flag, says David Dayen at Firedoglake. "We are far from consensus on the contours of a payroll tax package," so when the Senate votes on Friday, "the first incarnation of a payroll tax cut extension" will probably get batted down. McConnell "most certainly doesn't agree with the Senate Democratic proposal, which widens and deepens the payroll tax cut," and pays for it with a 3.25 percent surtax on the top 0.1 percent of earners. Republicans said the Dems' plan would "crush small businesses," and they're pushing for offsetting the payroll tax break with spending cuts Democrats find "completely unacceptable."

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