And there it is. John Boehner has cried uncle. House Republicans will pass the two-month Senate stopgap bill to extend the payroll tax cut, unemployment insurance benefits and a doctor’s fix to avert a 27% cut in Medicare reimbursement rates. In exchange for this cave, Harry Reid will appoint conferees to go into negotiations on a year-long extension of these measures.

The House made the move after Senate Majority Leader Harry Reid, D-Nev., agreed to appoint conferees to a committee to resolve differences between the Senate’s two-month, 2 percentage point, payroll-tax cut and the House’s one-year alternative.

The House will pass the two-month extension with a technical correction to the language designed to minimize difficulties businesses might experience implementing the short-term, two-month tax cut extension.

I don’t really know what difficulties they’re talking about, since you’re extending current law, but payroll companies have raised this as an issue. This means that the House will have to pass a new bill, and have the Senate agree to it. Then the House and Senate will have to appoint conferees on the new bill. This could all potentially happen without any member of Congress coming back to work. You could pass these by unanimous consent in the pro forma sessions taking place in Congress. We’ll see how the mechanics of this play out.

On the politics, this is a major victory for Democrats and the White House. They forced Boehner to bend to their will, getting a relatively clean two-month extension of these three expiring measures. The pay-for means that first-time homebuyers will pay around $15 a month extra for having Fannie Mae and Freddie Mac guarantee their loans; the hope is that this becomes enough of an expense to get monoline insurers back in the game of private guarantees on mortgates, and shrink the size of the GSEs, which are taking pretty much all the action right now. And then there’s that Keystone XL rider. After this passes, the President and the State Department will have 60 days to approve or deny a permit for construction of the Keystone XL pipeline. The State Department has already said that they would be forced to deny the permit if they had to use such a narrow timeframe, and the White House has agreed with that assessment.

There’s still the larger issue of a one-year agreement. The conference committee may not meet until the House and Senate return to Washington in late January, giving them just a few weeks to come to an agreement. Typically conference committees with this kind of high profile end up getting decided in back rooms by the party leadership anyway. So the conference committee thing is largely a dodge so Republicans can say they got something in this exchange. They really didn’t. They politically gave in to the Democratic demand.

From a policy standpoint, this means that current policy will mostly stay the same for the next two months, pending an agreement to the end of 2012. There are still headwinds for the economy, but things won’t get actively worse as a result of these measures expiring, at least not yet. And these were major pieces of the American Jobs Act, so we can say that at least a bit of that passed.