February 17, 2012 in Business, Nation/World

Congress moves toward ending payroll tax cut fight

Associated Press
 
AP/Pablo Martinez Monsivais photo

Senate Majority Whip Richard Durbin listens Thursday during a news conference about a compromise deal on the payroll tax cut on Capitol Hill in Washington.
(Full-size photo)

WASHINGTON — The House kicked off debate today on extending a payroll tax cut for 160 million workers and jobless benefits for people out of work the longest, a showdown that many legislators hope will finally end a standoff that has dominated Washington since the fall.

Lawmakers were expecting the Senate to quickly and vote on the $143 billion package, which also would forestall deep cuts in Medicare reimbursements to doctors. The tax cuts, jobless coverage and higher doctors’ payments would all run through 2012.

Passage seemed virtually assured in the House and likely in the Senate, where Republican opposition was strong and several Democrats signaled they would defect.

Approval would hand election-year bragging rights to President Barack Obama, who made the tax cut and jobless benefit extensions a cornerstone of his September jobs package, over objections from many Republicans.

Extending the 2 percentage-point cut in the 6.2 percent Social Security payroll tax would save around $80 monthly for someone earning $50,000 a year.

The vast number of voters who would benefit from that tax cut helped persuade many GOP lawmakers that opposition made little sense with presidential and congressional elections looming this fall. House Republicans blocked a two-month extension of the tax cut and jobless coverage in late December, only to retreat quickly under a buzz saw of opposition from conservative and GOP leaders from around the country.

With that history, Republicans seemed ready to get the fight behind them and change the subject for the rest of this election year. And they said the final deal, significantly changed from a tea party-backed measure that passed in December, was the best Republicans could get.

“We don’t control Washington. Democrats still control Washington — they control the Senate and they control the White House,” said Rep. Dave Camp, R-Mich., the top House negotiators on the measure. “A divided government must still govern.” Camp cited stricter job search requirements for people receiving unemployment benefits and other reforms to the program as wins for conservatives.

But many GOP lawmakers were upset that the measure would add to the federal deficit and doubted that it would do much to boost the economy.

“I cannot and I will not support legislation that extends the payroll tax holiday without paying for it,” said Rep. Phil Gingrey, R-Ga. “This will add $100 billion to the deficit and it will create an even greater shortfall within the Social Security trust fund that already has over $100 billion shortfall just in the last two years.”

And the No. 2 Democrat in the House, Steny Hoyer of Maryland, excoriated the measure for cutting the retirement benefits of new federal hires.

“The only individuals paying for this bill out of 315 million Americans are the two million civilian workers who work for us, who work for all of us, who day after day, week after week, month after month,” Hoyer said.

Even so, the Senate’s majority Democrats were expecting to need more than 10 Republican senators to reach the 60 votes needed to advance the measure.

Some Democratic senators were defecting because of cuts the bill would make for civil servants’ benefits and health programs. Many Republicans were opposed because the measure would add $89 billion to federal deficits over the coming decade.

The reduction in the Social Security payroll tax, which is deducted from workers’ paychecks, would cost $93 billion through 2022. In a sudden concession this week that made bipartisan agreement possible, House Republicans dropped their demand that the tax cut be paid for with spending reductions.

In a GOP win, coverage for the long-term unemployed would be cut from the current maximum of 99 weeks to a ceiling of 73 weeks by this fall in states with the worst job markets, with most topping out at 63 weeks.

The $30 billion cost of the extended benefits would be paid for half by government sales of parts of the nation’s broadcast airwaves, half by requiring federal workers hired after this year to contribute an additional 2.3 percent of their pay for their pensions, up from the current 0.8 percent.

That increase also would apply to members of Congress, but only those who begin service as of next January — exempting every current lawmaker.

The bill also would prevent a 27 percent cut in federal payments to doctors who treat Medicare patients, a reduction that threatened to make it harder for seniors to find physicians.

That would cost about $18 billion. It would be paid for by trimming Medicare reimbursements to health care providers to cover unpaid medical bills, cutting payments to hospitals that treat large numbers of poor patients and cutting a fund created in Obama’s health care overhaul for preventing diseases caused by smoking and obesity.

A House-approved measure letting states test unemployment benefit applicants for drug testing was pared back, permitting the tests only for people who lost their jobs due to drug use or whose new jobs would require such tests.

Those seeking unemployment coverage would have to show they are actively seeking work, but another GOP-backed provision forcing them to pursue high school equivalency diplomas was abandoned.

© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


There are 21 comments on this story. Click here to view comments >>

Get stories like this in a free daily email