Standoff on payroll tax holiday extension continues

With the standoff over the payroll-cut tax package now set, and just 10 days for Congress to act, what is Harry Reid thinking?

Top aides say the Senate majority leader remains adamant and will not relent to House GOP demands to appoint conferees and resolve differences between the House and Senate payroll-tax cut bills. Reid's associates say they expect "some blowback" in public opinion following the House's rejection of the Senate bill, but they don't see the Democrats losing the tactical polling advantage. That's the firewall behind Reid's implacable hostility to the House GOP gambit, and it won't change -- and he won't budge -- unless and until public mood shifts against Democrats and the White House.

Senate Democrats don't expect that to happen in the coming days, betting that the inevitable focus on holiday celebrations and shopping will give Republicans little room and scarce traction to blame Democrats for the payroll-tax stalemate. In this, Reid notes with savvy sympathy the studied silence of Senate Minority Leader Mitch McConnell, R-Ky., who has said nothing publicly about the House GOP uprising and through a spokesman offered only tepid reassurances that he would assist Speaker John Boehner and House Republicans in their clash with Reid.

Internally, Senate Democratic polling remains favorable in the key battleground states for 2012 candidates, Democrats say. Public polling so far has begun to reflect a shift away from Republicans on trustworthiness to deal with taxes. The Washington Post-ABC News survey showed an abrupt switch on the question from October until now. In October, President Obama trailed Republicans 39 percent to 46 percent but now leads them 46 percent to 41 percent. Even so, Obama's overall approval ratings and approval of his handling of the economy do not yet reflect this shift and remain below 50 percent and, in some cases, stuck in the low- to mid-40s.

The chore ahead for Republicans is to shift the payroll-tax debate from the two-month Senate compromise to an as-yet undefined one-year payroll-tax cut with unspecified spending cuts. The difficulty, as even Republicans concede, is the simplicity of messaging. All Democrats have to do is defend a two-month tax cut that won a huge bipartisan majority in the Senate. House Republicans must persuade large swaths of voters that it's more important to pursue a conference committee -- with an unknown result because Republicans can't decide on the most desirable outcome -- just because Republicans voted against the Senate compromise.

Put another way, Democrats are asking voters if they care about a tax cut; House Republicans are asking if they care about a legislative process. Internally, process can trump politics and policy. Externally, it usually dies a swift and unlamented death.

House Republicans tried on Tuesday to put a price on Reid's head, arguing he's only in favor of a $166 payroll-tax cut per person (the average pro-rated amount of a two-month extension) while Republicans want a $1,000 tax cut (the average of a year-long cut).

"The American people are beginning to wonder what the leader of the other body has against the middle class," said House Majority Leader Eric Cantor, R-Va.

To make that message stick, House Republicans will have to conspicuously prowl the Capitol this holiday week, to visibly underscore their desire to "work" on a compromise. But rank-and-file Republicans will depart, leaving the eight House GOP conferees marooned in an empty Capitol awaiting a conference committee that doesn't now and may never exist. Cantor informed his GOP colleagues they will receive 24 hours' notice to return to Washington, should developments warrant.

Reid, aides say, will digest these maneuvers from Washington while his wife, Landra, undergoes treatments for breast cancer. He has no plans to return to the Capitol and has received no indication from the White House that Obama will leave for his traditional Hawaiian holiday vacation. Democrats readily admit if Obama were to leave, that would undercut Reid's position because it would signal the work will be for Reid to finish and it can only be finished if Reid relents and gives Republicans a conference committee.

At this point, there's no indication Obama or Reid will break. House Republicans will have to move them. To do that, they first have to move the public. The next 48 hours, therefore, may not only decide the fate of the payroll-tax cut extension, but reveal whether House Republicans can, having picked a fight with Reid, do more than circle a vacant ring, flailing at empty air and indifferent shadows.

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