The Washington Post

Congressional negotiators near deal on payroll tax, unemployment benefits

President Obama speaks about a payroll tax cut and unemployment insurance February 14, 2012 at the South Court Auditorium of the Eisenhower Executive Office Building of the White House in Washington, DC. (Alex Wong/GETTY IMAGES)

Congressional negotiators reached a tentative deal Tuesday to extend a payroll tax holiday, unemployment benefits and Medicare payment rates for doctors, while finding more than $50 billion in cuts to reduce the effect on the federal deficit.

While President Obama and congressional leaders publicly jousted over the negotiations, senior Democrats and Republicans worked behind the scenes toward a compromise that would extend the tax and unemployment benefits through the year. A deal also would mean that doctors would not see a drop in rates paid by Medicare, according to senior aides in both parties.

Lawmakers and aides stressed that final details are still being ironed out — including which cuts would be used to finance the unemployment and Medicare provision — but they were optimistic that a broad deal would be announced Wednesday and approved by Friday. Republicans left a meeting Tuesday night in which House Speaker John A. Boehner (R-Ohio) and his leadership team outlined the emerging deal with few dissenters and several key supporters among the sometimes-volatile GOP freshman class.

“If everything holds as is, we’ll be signing [the compromise] tomorrow,” said Rep. Renee Elmers (R-N.C.), a freshman member of the House-Senate committee negotiating the measure. “It is a compromise. We knew we were going to have to compromise.”

In remarks at the Eisenhower Executive Office Building on Tuesday morning, Obama called it “good news” that House Republicans have agreed to a compromise on the tax holiday by allowing that piece of the package to be approved without offsetting spending cuts, a concession from their previous position.

But, he cautioned, “you can’t take anything for granted here in Washington until my signature is actually on it,” and he encouraged Americans to lobby their representatives in Congress to approve the measure “without drama, without delay.”

“Let’s keep making sure the American people’s voices are breaking through until it’s finally, absolutely done,” he said.

Obama was alluding to a payroll tax debate in December, when Senate leaders forged a bipartisan agreement on a two-month extension only to have House GOP leaders balk at the plan. His aides have said this package probably is the last major piece of legislation that the West Wing would focus on until the November elections.

The major breakthrough in negotiations on the broader package came over the weekend when the lead Republican negotiator, Rep. David Camp (Mich.), informed his Democratic counterpart, Sen. Max Baucus (Mont.), that Republican leaders said they would agree to extend the tax holiday through the end of the year without requiring Democrats to offset the cost. Payroll withholdings, normally 6.2 percent, were lowered to 4.2 percent at the beginning of 2011 after the Obama White House negotiated a compromise tax plan with congressional Republicans.

The tax holiday, which is set to expire at the end of this month, saves the average worker more than $80 a month. Budget officials estimated that an additional 10-month extension would cost the Treasury about $100 billion.

Without the need to offset the extension, the Camp-Baucus talks had to result in only a little more than $50 billion in offsets to finance the jobless benefits and the Medicare provision. The task became much easier as the numerous budget showdowns of 2011 produced hundreds of billions of dollars in spending cuts intended for much broader deals that never came to fruition, thus giving Baucus and Camp a menu of options from which to find the savings.

On unemployment benefits, which will cost about $30 billion, Democrats were forced into a choice to hit the federal workforce: either another pay freeze or a requirement that workers contribute more to their pension plans. Late Tuesday, a senior Democratic aide suggested that Democrats preferred the increased pension contributions, something Obama has supported. Republicans sought more than $20 billion in savings on health-care programs, including a Medicare payment program to hospitals and a small fund for Obama’s landmark health-care law, while Democrats refused any cuts that would reduce benefits for elderly patients in the health-care program.

In addition, the two sides reached a tentative plan to reform unemployment benefits, reducing the maximum time frame to benefit from the jobless insurance program to 73 weeks in the states with the hardest-hit economies.

Paul Kane covers Congress and politics for the Washington Post.
David Nakamura covers the White House. He has previously covered sports, education and city government and reported from Afghanistan, Pakistan and Japan.

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