Payroll-tax cut, unemployment deal sealed

Payroll-tax cut, unemployment deal sealed
The U.S. Capitol Building is seen in Washington on December 20, 2011 when the House initially failed to pass a two-month extension of the payroll tax cut. UPI/Kevin Dietsch | License Photo

WASHINGTON, Feb. 16 (UPI) -- Lawmakers sealed a $150 billion House-Senate deal to extend a U.S. payroll tax holiday, unemployment benefits and Medicare payment rates, key negotiators said.

The deal clears the way for a full House and Senate vote before the existing legislation expires Feb. 29, Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Chairman Dave Camp, R-Mich., said.


The agreement, coming after lawmakers of both parties said it nearly fell through late Wednesday, keeps the Social Security payroll-tax withholding for 160 million workers at 4.2 percent -- a 2 percent cut worked out at the beginning of 2011 after the Obama White House negotiated a compromise tax plan with congressional Republicans, lawmakers said.

This lets the average worker earning $50,000 take home an extra $1,000 in pay over the year, lawmakers said. The costs of the payroll-tax cut will not be offset with spending cuts, a major concession agreed to Monday by House Republicans.

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The deal calls for $93 billion forecast to be lost to the Social Security Trust Fund to be fully replaced with money from the U.S. Treasury's general fund, lawmakers said.


The deal, whose details were not fully announced early Thursday, renews expiring jobless benefits, but cuts the maximum number of weeks to 73 from 99, lawmakers said.

That means some long-term unemployed workers will stop receiving benefits before the end of the year, The Wall Street Journal reported.

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George Wentworth, senior staff attorney with the National Employment Law Project, which advocates for longer jobless benefits, told the newspaper it appeared the deal would phase out at least 500,000 workers from jobless benefits by fall.

Republicans argued extended jobless benefits prolong unemployment by discouraging workers from aggressively looking for work. Democrats said the benefits were vital to workers at a time when it's hard to find a job.

The measure's roughly $30 billion price tag will be picked up by the sale of radio spectrum licenses and the federal worker-benefit changes.

The deal calls for Medicare to continue paying doctors at current rates, avoiding a 27 percent drop in physicians' fees, lawmakers said.

To help offset the $30 billion cost of paying doctors under Medicare, the agreement will reduce payments to hospitals.

House Speaker John Boehner, R-Ohio, said he expected the House would vote on the deal by Friday.


Senate Majority Leader Harry Reid, D-Nev., did not immediately say when the Senate would vote.

Sen. Rand Paul, R-Ky., has held up Senate votes this week to protest a decision by Reid to deny Paul separate legislation to strip Egypt of foreign aid for 30 days as punishment for detaining U.S. pro-democracy workers.

Both chambers scheduled a weeklong recess after Friday's close of business.

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