Vote on payroll tax extension likely Friday

February 16, 2012

Amid some dissent, House and Senate leaders prepared for final votes Friday for an economic package worth more than $150 billion that would extend a payroll tax holiday and unemployment benefits for the rest of the year.

While Senate Republicans protested, the remaining members of a House-Senate committee tasked with forging a compromise pronounced themselves satisfied with the deal, signing the 270-page compromise Thursday afternoon in a bipartisan ceremony that stood in sharp contrast to the otherwise bitterly partisan tone of this Congress.

Key congressional leaders endorsed the plan, providing some optimism in the Capitol that it could be sent to President Obama this weekend for his signature. House Minority Leader Nancy Pelosi (D-Calif.) told reporters Thursday that the plan would likely be “acceptable” to most of her members, and House Speaker John A. Boehner (R-Ohio) called it “a fair agreement, and one that I support.”

The bill would extend a 2-percentage-point reduction in the 6.2 percent Social Security payroll tax through 2012 for about 160 million workers, saving the average worker about $1,000 for the year and effectively removing the issue from political campaigns.

A key roadblock was overcome when congressional negotiators agreed to require only new federal workers to contribute more to their pension plans, clearing the way for the 12:30 a.m. Thursday announcement of a deal.

“This is good for the country; it’s very good for the country. We have an agreement,” Sen. Max Baucus (D-Mont.) said at a hastily arranged post-midnight news conference in a Capitol hallway. Baucus was joined by Rep. Dave Camp (Mich.), the lead GOP negotiator.

In addition to a 10-month extension of the payroll tax holiday and unemployment benefits, House Republicans won a reduction in unemployment eligibility, dropping the maximum tenure for receiving benefits from its current limit of 99 weeks in many states. Now, most states will see jobless workers able to claim 63 weeks of unemployment benefits, but workers in states hardest hit by the recession will have eligibility for 73 weeks.

The legislation also includes a temporary fix for Medicare’s payment plan, intended to prevent a 27 percent drop in fees paid to doctors who treat elderly patients.

The three Senate Republicans who participated in the so-called conference committee — established in December to hammer out differences between the House and Senate proposals — were the only signatures not inked on the document. They protested because they had been seeking to include an exemption from portions of the 2010 health-care law for physician-owned hospitals, dozens of which were under construction at the time the law passed and have since been left in limbo.

Democrats opposed the exemption, contending that federal studies have shown that hospitals owned by doctors tend to order more tests and have higher costs because the physicians have a stake in the institution’s profitability.

Instead, Baucus and Camp turned to the Maryland Democrats on the conference committee, Sen. Benjamin L. Cardin and Rep. Chris Van Hollen, who had been holding out support because of tough new contribution requirements for all federal workers to their pension plans. Obama weighed in with a call from Air Force One to each lawmaker, hungry for a victory on two pieces of jobs legislation that he requested back in September.

The Marylanders refused to give in until Obama, along with Baucus and Camp, agreed to shield current federal employees from the increased pension contribution.

In a joint statement Thursday, Cardin and Van Hollen still complained about the hit to new federal workers but endorsed the plan: “We are pleased that we were able to ensure that this agreement has no negative impact on current federal employees, but we still strongly oppose the provision that raises $15 billion to help offset the cost of this package from future workers,” they said.

That gave enough support to approve the plan without Senate Republicans. Because the legislation is a report from a House-Senate committee, it cannot be filibustered and requires just a bare majority in each chamber to become law. “It will pass,” Baucus predicted Thursday morning.

The legislation still has many critics, including Republicans and Democrats who complained about the impact of the withholding tax holiday on Social Security’s coffers.

Even Boehner's support came with criticism of Obama’s handling of the economic recovery. “Let’s be honest, this is an economic relief package, not one that’s going to grow the economy and create jobs,” Boehner said.

Some Washington-area lawmakers indicated Thursday they would not support the bill. House Minority Whip Steny H. Hoyer (D-Md.) accused Congress of “targeting these hardworking men and women” in the federal workforce while still not requiring millionaires to pay higher taxes. “For that reason, I cannot support this bill,” he said.

Virginia Sen. Mark Warner (D), similarly citing the pension issue, also lamented the fact that cost of the payroll tax holiday was not being offset. “We’re advancing a policy that I think will come back to haunt us,” Warner said.

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