House speaker says payroll tax bill won’t add jobs
Friday, February 17, 2012
WASHINGTON (AP) — Capitol Hill negotiators Thursday officially unveiled hard-fought compromise legislation to prevent 160 million workers from getting slapped with a payroll tax hike, but it ran into turbulence in the Senate, where Republicans withheld support and several Democrats attacked it.
The measure would also extend jobless benefits and is a top election-year priority for President Barack Obama. It generally won backing from his Democratic allies in Congress. But it’s getting only grudging support from House Republicans and even less from Obama’s GOP rivals in the Senate, where party negotiators shunned the measure and its $89 billion impact on the budget deficit over the coming decade.
“The typical American family will still see an extra $40 in every paycheck, keeping nearly $1,000 of their hard-earned money this year,” Obama said in a statement. “And millions of Americans who are out pounding the pavement looking for new work to support their families will still be able to depend on the vital lifeline of unemployment insurance.”
But support in the Senate, where Democrats control 53 votes, seemed soft. It will take 60 votes to advance the measure, and Democratic vote counters braced for defections. They also worried that Senate GOP leader Mitch McConnell of Kentucky wasn’t rounding up Republican votes.
Meanwhile, in the House, the top Republican said the $143 billion measure won’t do anything to help the economy.
“Let’s be honest, this is an economic relief package, not a bill that’s going to grow the economy and create jobs,” House Speaker John Boehner, R-Ohio, said. But after losing a fight over the legislation at the end of last year, Republicans were determined to clear it off of the political agenda and focus voters on Obama’s record rather than their battles with him.
“It was impossible to break through on the politics,” Rep. Greg Walden, R-Ore., said.
But several Democrats also came out publicly against the bill and others have privately signaled they’re likely “nay” votes. Most noteworthy was Sen. Tom Harkin, who came out in “vehement opposition” to the measure over cuts to Obama’s health care law and the reduction in a payroll tax that’s dedicated to paying Social Security benefits. Deficit spending would make up for the lost revenue, but that was little solace to the Iowa liberal.
“Make no mistake about it, this is the beginning of the end of the sanctity of Social Security,” Harkin said. “The very real risk is that Social Security will become just another program to be paid for with deficit spending, and then in the future, perhaps raided to help reduce the deficit.”
The legislation would extend through the end of the year a 2 percentage-point cut in payroll taxes that would fatten a typical bimonthly paycheck by $40. It also would renew jobless benefits that deliver about $300 a week to people out of work for more than six months.
And it would head off a steep cut in reimbursements for physicians who treat Medicare patients, at a cost of $18 billion, financed in part by cuts to a fund created under Obama’s 2010 health care law that awards grants for preventive care and by curbs on Medicaid payments to hospitals that care for a disproportionate share of uninsured patients.
The pact was sealed after weeks of negotiations, first a public round featuring speechifying and bickering, and then a more intense private round in which Rep. Dave Camp, R-Mich., and Sen. Max Baucus, D-Mont., took the lead. The two men, the respective chairmen of the House and Senate panel with jurisdiction over taxes, unemployment insurance and Medicare, have forged a close working relationship, even as top party leaders publicly traded salvos over the negotiations.
Combative Democrats like Sen. Chuck Schumer of New York openly boasted of the leverage Democrats carried into the talks. He almost seemed to welcome a reprise of a bruising December battle when House Republicans refused to back a bipartisan Senate bill providing a two-month extension of the tax cuts and jobless benefits to buy time for negotiations on a yearlong deal.
But Republicans had no interest in reprising their December experience, when they got their heads handed to them after a barrage of criticism from Republicans and conservatives around the country — featured almost every hour on 24-hour cable new networks.
GOP leaders gave the talks a major boost over the weekend by dropping a demand that the tax cut be paid for with spending cuts.
The move guaranteed that the measure wouldn’t be popular with deficit hawks in either party. In addition to Harkin, Sens. Joe Manchin, D-W.Va., and Mark Warner, D-Va., also came out against the measure on Thursday.
According to a Congressional Budget Office estimate released Thursday, the measure would add $141 billion to the deficit during fiscal 2012-2013, with $52 billion of that cost gradually recouped over the coming decade.
Still, piling most of the measure’s cost onto the $15 trillion-plus national debt meant negotiators had to find just $50 billion or so in revenues or spending cuts to finance renewing jobless benefits and fixing the Medicare payment rate.
About $15 billion came as free money to be raised by auctioning off parts of the broadcast television airwaves to wireless companies. Even more would be raised in upcoming auctions, but broadcast license holders would be compensated for giving up spectrum, while $7 billion would be dedicated to creating a new public safety network for emergency first responders. That would complete a key remaining recommendation of the commission that looked into the way emergency officials dealt with the 9/11 terror attacks.
The last major hang-up involved changes to a provision demanded by Republicans to require federal workers contribute more to their generous defined benefit pension plans. Most pension systems have switched to less generous but more mobile defined contribution plans.
The provision, modified to win support from key members of the Maryland delegation, requires newly-hired federal workers to contribute 2.3 percent more of their salaries toward their traditional defined benefit pensions, raising $15 billion over the coming decade.
Sen. Ben Cardin and Rep. Chris Van Hollen, two Maryland Democrats, had bitterly fought an earlier plan — tentatively agreed to by key Democrats like Baucus — that would have required current federal workers to contribute 1.5 percent more to their pensions.
“We will not let others find excuses to extend the gridlock,” Van Hollen and Cardin said in a joint statement. “But it is inherently unfair that the primary offset found for extending unemployment insurance came from additional sacrifice from other middle-class families.”
Republicans claimed victory in reducing the number of weeks of jobless benefits that workers would be eligible to receive. The maximum number in states with the highest jobless rates would be cut from 99 weeks to 73 weeks by the end of the year. Republicans had wanted to cut the maximum to 59 weeks. But in states with particularly high unemployment, such as Rhode Island and Nevada, the measure is actually more generous over the next few months than current law.
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