Congress Passes Tax Cut Extension and Jobless Aid

[General Mung Beans]

http://www.nytimes.com/2012/02/18/us/po ... f=politics

Tax Cut Extension Passes; Everyone Claims a Win
Doug Mills/The New York Times

House Speaker John A. Boehner left the legislative chamber after voting on the payroll tax bill Friday.
By ROBERT PEAR and JENNIFER STEINHAUER
Published: February 17, 2012

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WASHINGTON — With each party claiming that it had pocketed an election-year victory, Congress on Friday voted to extend payroll tax cuts and unemployment benefits and sent the legislation to President Obama, ending a contentious policy fight that left lawmakers with the political bruises to show for it.

House Republican leaders were forced to turn to Democrats for passage; of the 293 who voted for the roughly $140 billion package, 147 were Democrats, carrying the proposal over the top Friday morning with the acquiescence of almost as many Republicans. It was only the second House bill in the 112th Congress to be split roughly in half along party lines; the other was a spending bill.

The Senate followed within minutes and approved the measure on a vote of 60 to 36. Mr. Obama has said he would sign the bill as soon as Congress passed it.

The bill would maintain a two percentage-point payroll tax cut for 160 million working Americans, provide added unemployment benefits for millions and protect doctors who accept Medicare from a large cut in reimbursements.

Democrats could count far more policy victories in the bill: the payroll tax break will not be paid for, large changes that Republicans sought to the unemployment insurance program were not realized, and the program was extended far beyond what the opposing party sought. But Republicans were satisfied that they had excised an election-year issue that Democrats were seizing on to harm them.

Further, the agreement changes the pension program for some federal workers, which angered some Democrats from states with many federal workers and led them to oppose the measure. After the vote, members fled for the airports to begin a one-week recess, during which they will face the verdict of their constituents on their role in one of the most contentious fiscal policy battles of the 112th Congress.

“One hundred sixty million Americans,” said Senator Max Baucus, the Montana Democrat who, as chairman of the Finance Committee, led negotiations over the measure with the House. “That’s the number of Americans who are helped by this bill.”

A compromise allowing the extension of the tax holiday for the rest of the year came together quickly this week, as Republicans decided that it was not politically viable to resist in an election year. It avoided an abrupt increase in payroll taxes that would have taken effect March 1, returning them to the level of 2010. The taxes are withheld from the paychecks of most wage earners and finance the Social Security system.

In the negotiations, which took place during a two-month temporary extension of a popular tax break that had been in place throughout 2011, Republicans gave up on their demands that the tax cuts be paid for.

According to the Congressional Budget Office, the package will increase the budget deficit by $126 billion over the next five years, but by a bit less over the longer haul as more of the spending reductions take effect.

Republicans who supported the deal said they had won several important concessions during the talks, like imposing new conditions and limits on unemployment compensation and cutting the preventive health spending called for in the health care overhaul Democrats pushed through Congress in 2010. Representative Renee Ellmers, Republican of North Carolina, called that cut “the most dramatic blow to Obamacare yet.” Some Democrats sharply condemned the deal. Even those who voted for the bill, which the White House supported and Democrats considered a major act of economic stimulus, said some provisions were misguided.

Two Democratic leaders, Representatives Steny H. Hoyer and Chris Van Hollen, whose Maryland districts contain thousands of federal employees, denounced the cutting of government contributions to pensions for federal workers, the savings from which will pay for the extension of unemployment aid. The Maryland lawmakers would have preferred tax increases on the wealthy or on corporations, or closing loopholes like the one that lets fund managers treat their income as lightly taxed “carried interest.”

“Nobody else in this bill, not a millionaire, not a billionaire, not a carried-interest beneficiary, not an oil company, nobody in this bill other than federal employees is asked to pay,” said Mr. Hoyer, the Democratic whip, confident that his denunciation of the bill would not endanger its passage. The two Maryland senators also rejected the measure.

Under the bill, the government would save $15 billion over 10 years by reducing its contribution to federal employee pensions and requiring new workers to contribute more.

Not too surprising. Some of the voting is rather interesting-for example Tea Party candidate Marco Rubio voted for this unlike most Tea Partiers while John McCain voted against this.