Payroll tax cut victory lifts Obama

President Barack Obama flew to Hawaii with a subtle dig at Republicans after winning an important political victory that has added to signs his electoral fortunes are improving.

Congress on Friday approved a two-month extension to payroll tax cuts which are equivalent to $1000 per year for the average American family, ending a week-long standoff between Republicans in the House of Representatives and the White House. The vote came after congressional Republicans backed down.

While many Republicans view the two-month deal as the sort of grubby compromise that has made Washington unpopular, they found themselves in the uncomfortable position of effectively supporting a tax hike on ordinary Americans, having blocked Democrats’ plans to raise taxes on the rich.

The standoff over the payroll tax allowed Mr Obama to highlight the political argument he hopes will be the centrepiece of his re-election campaign: that while he has been defending the interests of middle-class Americans, the Republicans in Washington were only out to obstruct his administration.

Aware that the same issues will quickly return in the new year, Mr Obama urged Congress to “keep working, without drama, without delay” when it returns from the Christmas break to extend the tax cut and unemployment benefits for the full year. The year ahead would be “a make-or-break moment for the middle class in this country”, he said.

“Has this place become so dysfunctional that even when people agree, we can’t get things done? Enough is enough,” he said on Thursday, before House Republicans agreed to the extension.

Even before the events of this week, there were some signs that Mr Obama’s message about supporting middle-class America was starting to resonate, amid a job market showing modest signs of recovery. Two opinion polls this week put his approval rating at 49 per cent, up from the low 40s in October. Approval of Mr Obama also surpassed disapproval in several polls for the first time since a summer bounce after the death of Osama bin Laden.

An American media that usually frames political disputes in Washington as evidence of gridlock has been much more open this week in putting the blame for the impasse on Republicans.

The signs of growing discontent in rightwing circles at the strategy of House Republicans broke into the open on Wednesday when the editorial page of the Wall Street Journal warned: “We wonder if they might end up re-electing the president before the 2012 campaign even begins in earnest.”

For Republicans, the furore this week in Congress has been an uncomfortable reminder of the first Clinton administration, when they won a stunning victory in the 1994 congressional elections, only to be accused of overreaching and helping President Bill Clinton win re-election in 1996 after the federal government was shutdown during a budget dispute.

Resolving the payroll tax dispute was difficult for the GOP because it inflamed two competing instincts: their knee jerk support for any kind of tax cut but also their desire to attack Mr Obama for increasing budget deficits. They tried to argue that the cost of the payroll tax cut had to be offset with unpopular savings elsewhere, but that left Republicans with little negotiating power as a deadline loomed, stuck in the kind of nuanced position where they had so often caught Mr Obama.

Newt Gingrich, the House speaker during the government shutdown and currently a frontrunner for the Republican presidential nomination, this week cautioned his colleagues against picking such fights with the White House. “Incumbent presidents have enormous advantages,” he said. “And I think what Republicans ought to do is what’s right for America. They ought to do it calmly and pleasantly and happily.”