CQ TODAY ONLINE NEWS
Feb. 14, 2012 – 10:50 p.m.
Deal in Works on Payroll Tax Cut
By Sam Goldfarb, CQ Staff
After months of debate, Congress is moving toward extending payroll tax relief for workers through the end of this year, with the two top negotiators close to a deal that would also maintain benefits for the long-term unemployed and prevent cuts in payments to doctors who treat Medicare patients.
House and Senate leaders have not signed off on a final agreement, but the top negotiators, Senate Finance Chairman
The aide said Tuesday evening that a “couple of lingering” issues still needed to be resolved. Leaders had not made plans for floor votes in either chamber.
The developing accord might benefit the economic recovery by continuing a steady flow of federal dollars to workers and to the unemployed, who might in turn spend it on goods and services. In political terms, a deal is likely to be seen as a victory for President Obama, who has insisted on preserving the payroll tax cut as he campaigns for re-election.
Agreement on the extensions bill (
Retaining the reduced payroll tax rate has been the highest-profile issue before Congress since last fall. After clearing a two-month extension (PL 112-78) of the tax cut and other expiring programs in December, Congress created a House-Senate conference committee to reach an agreement on the longer-term bill.
Following weeks of talks, the task faced by House and Senate conference negotiators was made significantly easier when House Republicans dropped a demand that the cost of extending the payroll tax cut be offset by corresponding spending cuts.
Having backed down on that issue over this past weekend, Republican leaders made their decision public Feb. 13 in an attempt to gain leverage over the remaining items in the legislative package.
Renewing the payroll tax cut without offsets would add roughly $100 billion over 10 years to the budget deficit. However, if rank-and-file Republicans were to balk at the deal, it probably would not occur at all.
Details on Offsets
According to congressional aides, the jobless benefits and physician reimbursement parts of the measure — which carry a much smaller cost — are likely to be offset by auctioning off a portion of electromagnetic spectrum used by television broadcasters and by reducing some mandatory spending accounts, including aspects of the 2010 health care overhaul (PL 110-148, PL 110-152).
The spectrum sale would raise roughly $15 billion over 10 years. And requiring federal employees to contribute more money to their retirement accounts, and at the same time requiring the government to contribute less, would save another $15 billion.
A further $20 billion in needed offsets would be found mostly in the area of health care spending. For instance, the potential deal would reduce federal payments to hospitals when Medicare beneficiaries fail to pay for services. And it would cut money allocated to a fund created by the health care law to finance preventive health projects.
Deal in Works on Payroll Tax Cut
Trying to put a positive spin on the agreement, a GOP aide familiar with the talks emphasized the reduction in health care spending. The aide also said the maximum length of jobless benefits would be reduced from 93 weeks to 63 weeks in many states, an outcome close to what Republicans had long wanted. In states with an unemployment rate above 9 percent, the cap on unemployment benefits would decline over time from 99 weeks to 73 weeks.
States would be allowed to require drug screening of unemployment recipients who lost a job because of a failed drug test or who are searching for a job that includes mandatory drug testing, the aide said.
Republicans had been seeking a similar drug testing requirement. But it appeared as if they had lost their fight to require people receiving jobless benefits to have a high school diploma or be pursuing an equivalent degree.
Recent negotiations have been led by Baucus and Camp, although House and Senate leaders have also been involved. Party leaders had been trying to reach a deal by the end of this week.
In observance of Presidents Day, neither the House nor the Senate is scheduled to be in session next week, and the payroll tax cut, unemployment benefits and doctor reimbursements are currently set to expire at the end of the month.
Early Reaction
Despite some misgivings, most House Republicans seemed to grudgingly endorse the tentative agreement after hearing about it at an evening meeting of their conference.
“The mood is to get it off the table,” said freshman
“Most people are for it,” said
Earlier in the day, Senate Democratic leaders were in a buoyant mood as they saw signs that an agreement was coming together.
Republicans were engaged in a “full-scale retreat on the payroll tax cut,” said the Senate’s No. 3 Democrat,
In dismissing threats from House Republican leaders that they might schedule votes on a stand-alone payroll tax cut bill, Schumer said Republicans had no more leverage over the fate of unemployment insurance (UI) programs than they did over the payroll tax cut.
“If Republicans don’t get serious about continuing UI, and seek to go ahead with the stand-alone bill on payroll only, they’ll risk looking like they’re leaving unemployed Americans in the lurch,” he said.
Deal in Works on Payroll Tax Cut
At a public appearance in Northern Virginia, Obama delivered a similar message, urging voters to “keep the pressure” on Congress until it extends the lower payroll tax rate and jobless benefits.
“Congress needs to extend that tax cut along with vital insurance lifelines for folks who have lost their jobs during this recession, and they need to do it now, without drama and without delay,” Obama said.
Still, not all Democrats were happy that the potential agreement would add to the deficit.
“I think it’s hard to continue to say we’re going to always deal with deficit reduction tomorrow,” Sen.
But another fiscally conservative Democrat offered a different assessment. If the choice were extending the payroll tax cut and adding to the deficit, or not extending the tax cut, Senate Budget Chairman
“It’s far more important to do it in terms of strengthening the economy because we’re still weak,” Conrad said.
Joseph J. Schatz and Richard E. Cohen contributed to this story.