Deal to save payroll tax cut, unemployment

Feb. 15, 2012 at 2:30 AM   |   Comments

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WASHINGTON, Feb. 15 (UPI) -- A House-Senate deal to extend a U.S. payroll tax holiday, unemployment benefits and Medicare payment rates appears ready to be formalized, lawmakers said.

It's "a done deal, subject to the i's being dotted and t's crossed," Rep. Steve LaTourette, R-Ohio, was quoted by The Wall Street Journal as saying.

The deal, ending a long and angry debate, followed a major concession Monday from House Republicans, who agreed to extend the payroll-tax holiday without offsetting spending cuts.

The tax holiday is forecast to cost $93 billion through the end of the year, lawmakers said. Budget officials estimated it would cost about $100 billion.

President Barack Obama and fellow Democrats had argued the tax break, which saves the average worker more than $80 a month, is an emergency measure supporting the weak recovery and doesn't have to be paid for.

Without an agreement, payroll-tax withholding would rise March 1 for 160 million U.S. workers. The 2 percent payroll-tax break -- to 4.2 percent from 6.2 percent -- was worked out at the beginning of 2011 after the Obama White House negotiated a compromise tax plan with congressional Republicans.

While the payroll-tax break won't be balanced with corresponding spending cuts, federal unemployment-insurance extensions and Medicare reimbursements to doctors would be offset with spending reductions, lawmakers said.

Lawmakers made conflicting claims on the unemployment benefits' maximum duration under the new deal.

Some Democrats said the maximum length would be 73 to 75 weeks in hardest-hit states with the highest unemployment levels, while others told The Washington Post it could be as high as 99 weeks.

For most states, the maximum number of weeks would be capped at 63, both sides said.

The extension's $30 billion price tag would be paid for with a pension change for federal workers, coupled with the sale of radio-spectrum licenses and other smaller producers of revenue, The New York Times reported.

The deal would mean Medicare would continue paying doctors at current rates, avoiding a 27.4 percent cut in fees. The fee adjustment, expected to cost about $30 billion, would be funded by cuts in payments to Medicare providers, as well as a cut to the wellness and prevention fund in the Affordable Care Act, the Journal reported.

Many conservative Republicans expressed displeasure with the deal.

"Leadership clearly has a positive desire to put this behind us and are not as open to listening to the rest of the conference to find out what the conference thinks," Rep. Bill Huizenga, R-Mich., was quoted by the Times as saying as he left a House Republican meeting looking grim.

"I think you'll see a fair number of dissenters on it," Rep. Dennis Ross, R-Fla., was quoted by the Journal as saying. But "I think they'll have the votes to pass it," he said.

"I know enough to know I'm not voting for it," Rep. Jason Chaffetz, R-Utah, was quoted by the Times as saying.

Rep. Renee Ellmers, R-N.C., one of the lawmakers on a House-Senate panel working out the deal, said she would vote in favor of the deal because it was time to move on.

A vote on the measure would most likely happen by Friday, before Congress takes a week off, aides said.

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