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Congress sends payroll tax cut extension to Obama

Speaker of the House Rep. John Boehner, R-Ohio, speaks during a news conference Thursday on the payroll tax cut on Capitol Hill.

Speaker of the House Rep. John Boehner, R-Ohio, speaks during a news conference Thursday on the payroll tax cut on Capitol Hill.

— A proposed tax cut will impact 160 million workers and will finance Social Security spending for 10 months.

WASHINGTON — Congress on Friday approved legislation renewing a payroll tax cut for 160 million workers and jobless benefits for millions more, backing the main items on President Obama’s jobs agenda in a rare burst of Washington bipartisanship.

The Senate approved the $143 billion measure on a bipartisan 60-36 vote minutes after the House approved it by a sweeping 293-132 vote. Obama is expected to sign it shortly after returning from a West Coast fundraising swing.

Under the bill, workers would continue to receive a 2 percent increase in their paychecks, and people out of work for more than six months would keep jobless benefits averaging about $300 a week, steps that Obama says will help support a fragile recovery from the worst economic downturn since the Great Depression. The legislation would also head off a steep cut in reimbursements for physicians who treat Medicare patients.

The tax cuts, jobless coverage and higher doctors’ payments would all continue through 2012. Passage of the legislation hands Obama a victory over objections from many Republicans who oppose it but were eager to wipe the issue from the election-year agenda.

It also clears away a political headache for House Republicans, who 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.

“We’re dumb, but we’re not stupid,” Sen. John McCain, R-Arizona, told reporters after he voted. “We did not want to repeat the debacle of last December. It’s not that complicated.”

“I think everyone learned a lot from the end-of-the-year stuff,” said Senate Majority Leader Harry Reid, D-Nev. “Everything doesn’t have to be a fight.”

“Republicans,” Reid added, have “opposed virtually everything we’ve tried to do. I think they came to the conclusion that that hasn’t worked out very well.”

Opposition to the measure was stronger in the Senate, where Republicans voted against the measure by a 2-1 margin. Five Democrats and Sen. Bernie Sanders, I-Vt., opposed the measure, while 14 Republicans, including Minority Leader Mitch McConnell of Kentucky, backed it.

In the House, however, a solid majority of Republicans backed the measure despite reservations about its $89 billion impact on the budget deficit over the coming decade.

And Republicans 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 negotiator 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. Another concern was that it cuts a payroll tax that’s dedicated to paying Social Security benefits. Deficit spending would make up for the lost revenue, but some lawmakers fear it would chip away at Washington’s commitment to the program.

“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 an 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, day after day, week after week, month after month,” Hoyer said.

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 and give a maximum cut of $2,200 to high-end earners.

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.

Of the $30 billion cost of the extended unemployment benefits, half would be paid for 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 to 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.

Comments

waltspecht 2 years, 2 months ago

I wonder how long it is going to take the American Public to figure out they are planning an early death for the Social Security System. That is the funding they are losing, and have no intention of replacing. Those that worked and paid into the system will be the losers for this Political trickery.

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Sister_Ruby 2 years, 2 months ago

walt, if you and I don't mention it.......nobody will be mentioning it. The Press sure won't sound the alarm. Congress might as well just go ahead and make it permanent (ie either set the percentage at the lower level OR make the employer take up the slack by increasing their percentage) because nobody in Congress will be Courageous enough to take away this "benefit" ever in the future.

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agirl_25 2 years, 2 months ago

I suppose the SS program can be suspended or eliminated, but I don't believe it could ever fail because it “ran out of money.” This belief is the result of a common error: conceptualizing Social Security from the micro (individual) rather than the macro (economy-wide) perspective. Social Security is not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees tomorrow. That’s what it has always been and that’s what it has to be–there is no other possible way for it to work. The money workers put in today is immediately transferred to the retirees.

What is the Social Security Trust Fund, the pool of money that people say will dry up and make it impossible for anyone to receive their Social Security payments? It is the surplus that resulted from having collected more in taxes than was necessary to pay out to retirees. It is how much existing workers were overtaxed relative to the need to pay retirees in the past. It was never the source of the money paid to Social Security recipients. The trust fund serves as a place to park excess revenues when taxes exceed expenditures and from which additional funds can be drawn when the reverse occurs. It’s a buffer, sort of like that give-a-penny-take-a-penny tray at the local convenience store. The lesson from this is that if we want Social Security to “be there” when we retire, our efforts must be focused on increasing productivity and making sure in particular that these increases get passed on to workers in the form of higher wages. In closing, I’m not telling you whether you should be for or against Social Security, just giving an opinion. I like mine and don't worry about losing it or having it reduced and see it as a political ploy everytime elections roll around...

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waltspecht 2 years, 2 months ago

Regretably as the number of workers decreases, so does the contribution to Social Security. The trust fund was origionally established to provide additional funding for times like the great depression, when there wouldn't be enough coming in to cover the outgoing. Then Lyndon Johnson came up with the defination you quote and used the excess funds to fund Medicare and other programs. Yes, it can run out of money when there is more money going out, then is being brought in. No ploy, just an economic fact. The go broke date is calculated on just that time that this happens, and there is no Trust to see the system through hard times.

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agirl_25 2 years, 2 months ago

Most likely this comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.

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Black_Falcon 2 years, 2 months ago

And a REPUBLICAN CONTROLLED House passed the measure 293-132. Who would have thunk it!!

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Shinedownfan 2 years, 2 months ago

I guess they don't want to be demonized because they refused a "tax cut"' since that is all they go on about. The liberal media would crucify them if they opposed it. The democrats running for office would bring it up in their campaign commercials over and over again.

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Black_Falcon 2 years, 2 months ago

wouldn't their conservative base understand their position on fiscal responsibility and not buy into the liberal media "spin"?

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Shinedownfan 2 years, 1 month ago

The base that listens to talk radio would. Otherwise, everyone would believe the liberal media and damning commercials.

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agirl_25 2 years, 2 months ago

I don't pay a lot of attention to the vote...most of my focus is on the military part of the budget. My husband is retired military and the majority of our benefits are military related so I watch how it will affect us. Our main concern is health care just as it is in the private sector. So far it looks good.

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msa651 2 years, 2 months ago

Very missleading opening

"A proposed tax cut will impact 160 million workers and will finance Social Security spending for 10 months"

It doesn't finance SS, it steals 100 billion more from it !!!!

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Justice4Moma 2 years, 1 month ago

AND Washington was glad,Obama said' SEE we all CAN work together.' On one thing so far.And would nt you know it would be something like this.But this is why you wait,watch,listen,and then toss a coin on who to vote 4.

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