By Tim Reid
(Reuters) - They began this year vowing to slash spending and reduce government.
Republicans in Congress can boast that they have done just that: As 2011 ends, they have wrung $2 trillion in spending cuts from Democrats without conceding a penny in tax increases.
But the bare-knuckle tactics and brinkmanship that congressional Republicans have used to achieve several victories could come at a big cost for the party in next year's elections.
This week's tense standoff over how to extend payroll tax cuts for 160 million Americans offered an unflattering look at how conservative House Republicans occasionally have overreached in avoiding compromise, lawmakers, strategists and analysts say.
One of the biggest potential perils for Republicans in 2012 is the continuing influence of the party's Tea Party-affiliated lawmakers, who once again showed their ability to stymie efforts by Republican Speaker John Boehner to cut deals on legislation.
Despite overwhelming Republican support in the U.S. Senate for a compromise that would allow the payroll tax cut to be extended for two months, Tea Party Republicans in the House - as they often have done in 2011 - rebelled and refused to give ground, demanding instead a year-long extension.
Until recently, many Republicans did not push hard for the payroll tax cut, questioning claims that it would stimulate the economy. They were more focused on blocking President Barack Obama's call for a surtax on millionaires.
Their objections to extending the tax cut softened as Obama and other Democrats began to publicly question them for not being more enthusiastic about a tax cut that particularly benefits the middle class.
For Republicans, the tax cut bill became a vehicle for other legislative "sweeteners" they supported. Those included tacking on a measure that would force Obama to speed up a decision over whether to approve construction of the controversial Keystone XL oil pipeline from Alberta, Canada to the Texas Gulf Coast.
Republicans and unions say the pipeline would be a job-producing aid to oil production; environmental advocates object to it.
Analysts say Republicans' stance in the debate over the payroll tax cut has put them in a curious position.
"Republicans seem to be opposed to a payroll tax cut even though they have positioned themselves as the party of lower taxes. It's nuts," said Stu Rothenberg, a non-partisan political analyst.
"The bad news for Republicans in 2012 is that the louder the Tea Party squawks, the harder it is for Boehner to get things through the House. This gives Democrats and President Obama ammunition," Rothenberg said.
"Independent and swing voters just want stuff to get done. And if it looks as though - and to some extent it does - that the Tea Party are being disruptive and unwilling to compromise, they look like a problem that will hurt the Republican brand."
CONGRESS APPROVAL AT RECORD LOWS
Approval ratings for the U.S. Congress have been at historic lows. One recent poll put public support for Congress at just 9 percent.
The low numbers follow a year of bitter dysfunction in Congress.
The U.S. government narrowly avoided default, suffered the first-ever downgrade of its credit rating and barely averted three government shutdowns. And, a congressional "super committee" failed to reach a deal on reducing the country's massive $15 trillion national debt.
Yet throughout the year Republicans repeatedly outmaneuvered Democrats, whose demands for revenue increases and tax hikes on the wealthiest Americans were rebuffed.
The deal that ended the debate over increasing the nation's debt limit included nearly $1 trillion in spending cuts - and no tax increases.
The super committee's failure also triggered $1.2 trillion in scheduled across-the-board spending cuts, beginning in 2013. To the dismay of many Republicans, roughly half of those cuts would fall on the defense budget. Already some congressional Republicans say they will try next year to get those defense cuts reversed.
Republicans "got much more of their agenda passed than the Democrats," said David Gergen, a political analyst and former adviser to two Republican and two Democratic presidents.
"The Republicans promised to cut down government and 2 trillion dollars later - and with no tax increases - that is progress."
But, Gergen cautioned, "in these victories Republicans are paying a significant political price. Reputationally, Congress is falling into the doldrums, and Republicans are more blamed. The reputation of Republicans is lower."
Recent polls suggest that such victories have been costly.
A Pew Research Center survey released last week found that by nearly a 2-to-1 ratio, 40 percent to 23 percent, voters said Republican leaders are more to blame that Democratic leaders for what the pollsters called the "do-nothing Congress."
A Reuters-Ipsos poll this month found voters favor a generic Democratic candidate for Congress over a Republican one, 48 percent to 42 percent.
Chris Jackson, Ipsos' research director, said that much could change next year, but that "at this point, despite all the work Republicans have done this year, they haven't convinced voters that they should stay in power."
Many Republicans argue that Democrats are more to blame for Congress' struggles to deal with the U.S. government's deficits. They say Democrats refused to make significant concessions on the cost of the government-run health insurance programs Medicare and Medicaid, which are on course to be the biggest drivers of the long-term debt.
President Barack Obama, faced with a fragile economy, voter discontent and a national unemployment rate of 8.6 percent, has settled on a populist re-election message.
He has blasted Republicans for not supporting tax increases on the wealthiest Americans, and for House Republicans' rejection of the Senate's bipartisan plan to extend the payroll tax cut.
If the tax cut is not extended, payroll taxes for 160 million Americans would jump from 4.2 percent to 6.2 percent on January 1, costing a typical worker about $1,000 a year.
"The rebellion of the Tea Party faction of the Republican Party in the House has again snatched defeat from the jaws of victory," Steve Bell, a veteran Republican budget analyst, said of the payroll tax cut revolt. "The damage to the Republican brand is profound."
Ford O'Connell, a Republican strategist, also expressed frustration that despite his party's spending victories this year, they enter 2012 risking a voter backlash.
"The White House is winning the spin wars," O'Connell said. "The White House message that Republicans are the party of Wall Street and the rich is gaining more ground than any message the Republicans have.
"I think it is going to be more difficult for the Republican Party than the Democratic Party next year because the spin coming out of the White House is that the Republicans are unwilling to compromise. If the Republicans don't sharpen their message, they could suffer at the ballot box."
Besides the contest for president, the November 2012 elections include congressional elections in which the entire 435-member House and one-third of the 100-member Senate are up for re-election.
Control of the Senate (now led by Democrats), and possibly the House (now led by Republicans), is at stake.
Allen West, a first-term House Republican from Florida, said the president had "an incredible megaphone" in blaming Republicans for lack of progress in Congress.
"We need to do a better job of messaging," West told Reuters.
Mike Simpson, another House Republican, alluding to the Tea Party faction in his chamber, said: "The speaker (Boehner) and our leadership are between a rock and a hard place. They have a significant number of colleagues on the Republican side who don't want to compromise. They think that is a bad thing.
"It's the same thing on the Democratic side. Unfortunately, the extremes are getting further and further apart."
(Editing by David Lindsey and Eric Walsh)