Yesterday, House Republicans announced a surprising retreat: after insisting for weeks that any deal to extend the payroll tax cut, unemployment insurance and the Medicare “doc fix” would have to be offset by budget cuts, House Speaker John Boehner and his leadership team announced they would introduce a bill to extend the payroll tax cut for one year with neither conditions nor spending reductions.

For the second time in as many months, Republicans have had to step back from a confrontation with Democrats over the payroll tax cut. They insisted back in December that they wouldn’t pass any extension without deep cuts, but then did—along with extended unemployment insurance and the “doc fix”—though just for two months. Facing that deadline, they’ve surrendered again. It’s another defeat for Congressional Republicans, and their failure to obtain cutbacks is also a setback in their long-term strategy to shrink government, as Brian Beutler notes.

But there’s one important catch—if Democrats accept this compromise, it would leave 5 million unemployed Americans in danger of losing their benefits beginning on February 29. If that happens, people in the first four tiers of the federal unemployment insurance program could finish that tier, but would not be able to advance to the next one. Anybody on a separate extension, called Fed Ed, would lose their benefits almost immediately.

Republicans say they will continue to negotiate on the unemployment extension after the payroll tax cut is dealt with, but they have several draconian requests: that everyone on unemployment participates in GED programs if they have no high school degree, and also submit to mandatory drug testing. Republicans also want to reduce the length of benefits to fifty-nine weeks, which is less than the seventy-nine weeks the White House wants and the ninety-three weeks Senate Democrats want.

Advocates for the unemployed have blasted the move and warned Democrats not to accept it. Christine Owens, executive director of the National Employment Law Project, sent out a statement deriding the recent developments:

Unemployed women and men are tired of being pawns in partisan games. No one has suffered longer or deeper or more from the recession and slow job growth than the long-term unemployed and their families. To knowingly place their well-being on the line yet another time—to explicitly contemplate that their benefits will expire—is so beyond the pale, its proponents should be ashamed even to suggest it.

We hope the House of Representatives will reject this shameless stunt and act quickly and reasonably on both the payroll tax freeze and extension of unemployment insurance benefits. But if it fails or refuses to do so, NELP calls on the Senate and the White House to repudiate this cynical ploy and demand that the federal unemployment insurance programs be extended through the end of the year before the long-term unemployed are forced to do without the income support they vitally need to continue searching for jobs, support their families, and contribute to their communities.

Democrats have so far not agreed to the Republican compromise; House Democratic leaders said yesterday that both unemployment insurance and the payroll measure must be extended simultaneously. White House Press Secretary Jay Carney said yesterday an unemployment insurance extension was “equally” as important as the payroll tax cut, before immediately rephrasing his statement by saying it was “very” important.

Republicans calculate that by taking away the Democrats’ payroll tax cut leverage—that is, by agreeing to pass it with no strings attached—they can drive a harder bargain on unemployment insurance.  So there’s a few ways this could play out: fearful of not getting unemployment extensions, Democrats could come back to the table now and negotiate a total package that’s more friendly to Republican demands. Alternately, if that doesn’t happen, Republicans could just pass the straight payroll tax extension for one year and dare Democrats in the Senate to reject it. Even in that case, the Senate could approve it, but send back a package that also extends unemployment insurance, thus putting the onus back on the House Republicans.

This may seem like an overwrought, inside-the-Beltway food fight. But for millions of unemployed Americans, the outcome is crucially important—and there are only two weeks to solve the problem.