Politics & Government

Congress' payroll-tax deal a rare bipartisan effort

Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., center, accompanied by Rep. Fred Upton, R-Mich., left, signals a thumbs-up to reporters on Capitol Hill.
Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., center, accompanied by Rep. Fred Upton, R-Mich., left, signals a thumbs-up to reporters on Capitol Hill. AP

WASHINGTON — Congress on Friday overwhelmingly approved extending a payroll tax cut for 160 million workers through the end of the year, probably the biggest accomplishment lawmakers will be able to savor in 2012.

The rare bipartisan agreement, which also provides jobless benefits to the long-term unemployed and preserves Medicare payment rates to physicians, came without the hostility that's scarred economic debates since President Barack Obama took office in January 2009.

The House of Representatives voted 293-132 to approve the plan. Minutes later, the Senate agreed 60-36.

Under the bill, Social Security taxes for workers will remain at their current 4.2 percent level this year on wages up to $110,100. The rate was scheduled to go up by 2 percentage points next month. Friday's fix assures that the average worker earning $50,000 a year would continue to get a weekly break of $20.

Medicare payments to doctors, which had been scheduled to drop by 27.4 percent, will stay at current levels. Extended unemployment benefits for people who've been out of work for long stretches will continue, though for shorter periods.

Obama planned to sign the bill "right away when I get home," he told an audience at a Boeing plant in Everett, Wash., where he was wrapping up a three-day West Coast swing that included eight campaign fundraisers. He was due to return to the White House at 12:45 a.m. Saturday.

The legislation was crafted with unusual speed and bipartisan cooperation. Congress' approval rating has hit record lows in recent Gallup polls — it was 10 percent earlier this month — and most lawmakers face re-election in the fall.

Serious budget issues remain. Congress is supposed to approve an outline for the fiscal 2013 federal budget by mid-April, but few expect that to happen. Most anticipate little, if any, serious action on major deficit-cutting until after the November elections.

Friday was a day for lawmakers to show that they could get something done, though most conceded that it was a small step.House Speaker John Boehner, R-Ohio, said, "This is an economic relief bill, not a growth bill."

"It's not perfect but it is certainly the right thing to do now," added Rep. Fred Upton, R-Mich., the chairman of the House Energy and Commerce Committee. "Our economy is still struggling, big time."

Democrats joined the chorus. "This is very important to continuing the economic recovery in our country," said House Minority Leader Nancy Pelosi, D-Calif., who said the bill would help "to buy groceries, to buy gasoline, to make ends meet."

Lawmakers congratulated themselves on finally reaching a quick compromise.

The Founding Fathers "knew that even a divided government must still govern. And that is what we are doing here today, governing and providing a solution to the very real problems Americans are facing in their daily lives," said Rep. Dave Camp, R-Mich., the chairman of the House Ways and Means Committee.

The bill has three major components:

— The payroll tax. The extended tax cut could provide about a 0.6 percent increase in the gross domestic product, some economists said, enough to help give the still-fragile economy a boost.

— Medicare. The "doc fix" keeps payments to physicians and other health care providers at the current rates for the next 10 months.

— Unemployment benefits. Most Democrats have argued that there's no need to pay for such aid with budget cuts elsewhere or increases in revenue during tough economic times; Republicans insisted not only on paying for the benefits, however, but also on making some changes.

The current maximum duration of benefits, 99 weeks, will remain until May. After that the maximum will drop in stages, in most cases to 79 weeks during the summer and 73 in September. The maximums depend on a state's unemployment rate.

States will be allowed to drug-screen applicants who lost their jobs because of drug use or are required to get drug tests for their jobs.

Not everyone was pleased about the compromise bill.

The payroll tax break will cost about $94.5 billion, and it won't be paid for. The other provisions, costing about $49.5 billion, will be offset by a series of budget reductions and revenue-raisers, including auctioning part of the electromagnetic spectrum that TV broadcasters use, cutting money aimed at improving preventive health care and increasing new federal employees' pension contributions.

The pension provision was controversial. "Federal employees are not a piggy bank," protested Rep. Elijah Cummings, R-Md.

"The whole country is going to pay a price for the signal this bill sends," added Rep. Jim Moran, D-Va.

Lesley Clark contributed to this report.


Payroll tax cut information

House roll call vote

Senate roll call vote

Congress approval ratings


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