Spokane7
52°
February 17, 2012 in Business, Nation/World
Congress moves toward ending payroll tax cut fight
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.
Dish defends ad-canceling technology 
dataxman on February 17 at 9:05 a.m.
Everyone thank your grandkids for this largess - they are the ones that are going to be paying for it…
SugarShane on February 17 at 9:10 a.m.
dataxman by the time I have grandkids hopefully we will no longer be fighting wars we have no stake in and no longer putting people in prisons over a plant. If things are so bad here, by all means, head to Canada or Mexico, that’s the great thing about America, you can leave if you don’t like it.
PlanB on February 17 at 9:10 a.m.
Not sure why this is a “fight” since everyone is in basic agreement. I guess the Nopublicans couldn’t come up with some volatile, irrelevant issue to tie it to.
dataxman on February 17 at 9:58 a.m.
Sugar - no - I would rather stay here and turn this Country around. After we are successful I will load your U-Haul and get it pointed south. Canada is booming right now under a Conservative Government so you wouldn’t be comfortable there
johnclarke on February 17 at 10:28 a.m.
dataxman on February 17 at 9:58 a.m.
Sugar - no - I would rather stay here and turn this Country around. After we are successful I will load your U-Haul and get it pointed south. Canada is booming right now under a Conservative Government so you wouldn’t be comfortable there
http://www.reuters.com/article/2011/01/06/canada-economy-outlook-idUSN0612894220110106
Oh, snap.
oneanddone on February 17 at 11:23 a.m.
This “payroll tax” is only tangentially connected to future generations. It cuts social security and medicare - nothing else. That means employees are paying less and so will get less. Instead of social security and medicare going bankrupt in a few decades it will now be sooner. The bally-hoo from Congress touting this tax cut ignores the fact that this cut is making a bad situation worse - immediately. It’s the poster child for kicking the can down the road. It would have been far better to cut income tax so it was fully transparent.
July on February 17 at 11:48 a.m.
I cannot pretend to know all nomenclature that is our government and all that goes into passing measures etc. but I can comment on employee issues as I do payroll for a small business in Washington. Since Obama, we have struggled financially. Payroll taxes have increased; Not by much but if you multiply that amount by total number of workers, it is extraordinary. On unemployment benefits and Workers Comp (to be fair – injury benies have been in place for as long as I can remember). This is ridiculous! First, please Democrats, tell me how it is fair and just for someone to have worked for a company 1-2 years, was let go, but can sit at home receiving unemployment benies for 3 years!? There are jobs out there! They may only pay min wage, but they are out there. It has become easy to be “takers” and our current government has been class A enablers. Second, injury claims, even more ridiculous! Eleven years ago we had a brand new employee show up to his first job site (conveniently before the supervisor). This guy allegedly slipped and fell, hurting something inconsequential (of course-no witnesses). Despite our objections and appeals, this jerk gets $60 per day compensation. It would cost less to hire an investigator to defraud these people. Does Washington care? More importantly, does Washington D.C. care? All you supporters of the Democrats, think about this story when you get dinged for payroll taxes, assuming of course, you are working.
Pigrobin on February 17 at 1:02 p.m.
The title of the article should be “Congress Moves Country One Step Closer to Welfare State.” I’m sorry President FDR, your democrat brethren are destroying Social Security. Oh well, live for today…I got mine.
johnclarke on February 17 at 1:54 p.m.
July on February 17 at 11:48 a.m.
I do payroll for a small business in Washington. Since Obama, we have struggled financially. Payroll taxes have increased; Not by much but if you multiply that amount by total number of workers, it is extraordinary.
July, since you are clearly an expert on this matter help me understand. Specifically - what changed ? Exactly what payroll taxes have increased since Obama took office ?
dataxman on February 17 at 5:02 p.m.
jc - great article - if we were in 2011 and not 2012…
johnclarke on February 17 at 7:17 p.m.
dataxman on February 17 at 5:02 p.m.
jc - great article - if we were in 2011 and not 2012…
Um, so what they are kicking ass in Jan and Feb and that supports your statement? Right.
dataxman on February 17 at 7:21 p.m.
Jc - the article was from 1/2011 - projecting what the Canadian economy might do
Canada had higher growth last year than we did. Loonie is at par and their national debt is 1/3rd of our annual deficit.
johnclarke on February 17 at 7:22 p.m.
Pigrobin on February 17 at 1:02 p.m.
The title of the article should be “Congress Moves Country One Step Closer to Welfare State.” I’m sorry President FDR, your democrat brethren are destroying Social Security. Oh well, live for today…I got mine.
I don’t understand. I thought conservatives were 1) in favor of lower taxes 2) Anti gubmint safety net.
You should be in favor of this.
Are you having an argument with yourself? Who’s winning ?
johnclarke on February 17 at 7:40 p.m.
dataxman on February 17 at 7:21 p.m.
Jc - the article was from 1/2011 - projecting what the Canadian economy might do
Canada had higher growth last year than we did. Loonie is at par and their national debt is 1/3rd of our annual deficit.
2010 GNP
Canada 1.26 trillion
US - 14.56 trillion
In Canada total tax and non-tax revenue for every level of government equals about 38.4% of GDP,compared to the U.S. rate of 28.2%.
Without getting into the details (like Canada’s strict banking laws that allowed them to duck the banking disaster, and massive savings on Socialized Health Care) what are you saying? That we should raise taxes 10% vs. GDP across the board in the US? Looks like you are no longer a conservative, mate.
Are you sure you want to argue about this? I think you lost already.
misjustice on February 17 at 7:41 p.m.
“… 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.”
Rs want to “change the subject for the rest of this election year”? To what? Birth control? “War” on religion? REALLY?
Brilliant!
Pigrobin on February 17 at 7:55 p.m.
Well JC, why are you trying to put me in some monolithic category? I may be a fiscal conservative but that does not make me anti social security. We use to pay into SS from our earned income and for the past two years, our government has decided to draw one third of each worker’s share out of the ether or some unspecified government general fund (your choice). SS was not designed to be a welfare system and that’s what we are making it. It’s a real shame that we are allowing our elected representatives destroy one of the best “safety nets” ever designed for our society. Having said that, if you are not taking that 2% windfall our government is giving you each pay period and investing it in your retirement (IRA, 401K, 403B, etc.), you are a fool. Then again, it’s your money, spend away that’s what the idiots in DC want you to do.
johnclarke on February 17 at 8:12 p.m.
Pigrobin on February 17 at 7:55 p.m.
Well JC, why are you trying to put me in some monolithic category? I may be a fiscal conservative but that does not make me anti social security. We use to pay into SS from our earned income and for the past two years, our government has decided to draw one third of each worker’s share out of the ether or some unspecified government general fund (your choice). SS was not designed to be a welfare system and that’s what we are making it. It’s a real shame that we are allowing our elected representatives destroy one of the best “safety nets” ever designed for our society
Well well, look what the cat dragged in. How are we making Social Security a “welfare system” ? You are aware that 40% of all people drawing SS count on it as their primary source of income, right ?
Pigrobin on February 17 at 8:32 p.m.
When the government starts paying for it instead of the workers, it becomes a government welfare system. And that’s what is happening…we are not funding it from our current workers’ earned income and that is the slippery slope our wonderful congress critters have pushed us down. I thing it’s a bad deal now and a really bad deal for our children (forget about grandchildren, YOYO). Then again, if you are in that privatize SS crowd, you are taking that 2% and investing it in your own personal retirement fund. Good on ya.
johnclarke on February 18 at 8:59 a.m.
The government is not paying for it, and they never have. but you know that. In fact, SS has been paying the government in the form of loans.
dataxman on February 18 at 9:32 a.m.
jc - I was referring to growth. If you want a meaningful measure of GNP divide those numbers by the population and see what the GNP per capita is. And raising our taxes 10% of GDP still wouldn’t get rid of the deficit - as only a fraction of would go to Uncle Sam as you included all taxes - including Provincial.
Canada is rockin’ - I have relatives up there and they are doing quite well - both on the coast and in the interior
Pigrobin on February 18 at 10:07 a.m.
JC, last attempt to show you the issue with this. That 2% tax cut (as we are calling it) means 2% of our earned income is no longer going to the SS trust fund. So how is it being replaced? By taking it from the US Treasury’s general fund (aka national debt). SS was designed as pay as you go system where workers are taxed for their benefits. The transfer of general revenues (where ever they come from—I suggest the ether) to offset the 2% cut makes SS more like a welfare program, not to mention increasing the debt. You see it your way (all rosy and good) and I see it my way, the slow death of what was a well-designed national retirement program that is no longer a worker-funded program.