WASHINGTON – The Senate passed a temporary extension of President Barack Obama’s payroll tax cut Saturday, sending the House a package that would preserve the $1,000 average tax break for 160 million working Americans – and keeping the issue alive as the 2012 election campaign heats up.
Senators overwhelmingly approved a two-month continuation of the tax break, and then swiftly agreed to fund the government to avert a shutdown in a flurry of votes that capped a tumultuous year of partisan dysfunction.
It also included a temporary extension of long-term unemployment benefits and a Republican-backed provision that would attempt to expedite a decision on the controversial Keystone XL oil pipeline that Obama delayed until after the election.
Neither side was pleased with the short-term deal. The Republican-led House is expected to be cool to the package, and House Speaker John Boehner of Ohio had not yet publicly endorsed it.
Senators calculated, however, that agreeing to a two-month deal was better than risking the political fallout of a lapse in the tax break, which expires Dec. 31. The vote was 89-10, with seven Republicans, two Democrats and one independent opposed.
Senators also approved a $915 billion package Saturday to fund the government through September, the end of the fiscal year. The House approved the package earlier this week, but Democrats slow-walked passage until the payroll tax issue was resolved.
The White House believes the tax holiday, combined with the unemployment benefits, are key to stimulating the economy in 2012. Mainstream economists support that view and warn that failure to approve both could nearly cut in half the modest economic growth forecast for next year.
Although tax breaks are typically embraced by Republicans, they have panned this one, which shaves the Social Security contribution workers pay from 6.2 percent to 4.2 percent. GOP lawmakers doubt the tax cut is helping the economy and are skeptical of pledges that the reduced revenue stream to the Social Security fund will be replenished.