On a 293 to 132 vote, the House supported a compromise plan to keep giving workers a small amount of extra cash with each paycheck while also providing a continued cushion for the unemployed, and the Senate followed shortly afterward with a 60 to 36 vote to approve the plan. It now goes to Obama for his signature, giving him a victory on a portion of the massive jobs bill he presented to Congress last fall.
Democrats hailed Friday’s votes as something that would help buoy the economic recovery by putting more money in the hands of consumers, whose spending accounts for roughly two-thirds of the economy. The bill also reduces the amount of time unemployed workers can receive benefits and also assures that doctors do not see a scheduled 27 percent drop in payments from Medicare.
Those measures were accompanied by several efforts to curb the overall impact of the legislation on the federal deficit, including an auction of satellite spectrum to telecommunications firms and steeper contributions for new federal employees to their pension plans.
While the economy has been improving, many economists had been worried that taking the payroll tax cut away could endanger fledgling gains in employment and growth.
Mark Zandi, chief economist at Moody’s Analytics, said failing to extend the payroll tax cut and unemployment benefits would have reduced gross domestic product by 0.4 percent. That would cost about half a million jobs and bump up the unemployment rate by 0.3 percent, he said.
“The recovery is not yet home free,” Zandi wrote in his blog. “A self-sustaining economic expansion is close at hand, but only if policymakers don’t withdraw government support too quickly.”
The new stimulus bill comes three years to the day after Congress passed Obama’s $787 billion American Recovery and Investment Act, his administration’s first attempt to restart the sputtering economy. With Friday’s action, Congress has now spent more than $1.15 trillion since 2009 trying to boost the economy, including the original stimulus bill, the 2010 extension of President George W. Bush’s income tax cuts, the payroll tax cuts over the last three years, first-time homebuyer’s tax credits and unemployment expansions.
Speaker of the House John A. Boehner, while supporting the plan, argued that it was an “economic relief” package that would do little to boost hiring. Boehner (R-Ohio) mocked Obama aides for calling this the last “must-do” item and called for the president to accept some of the GOP’s conservative prescriptions.