The payroll tax holiday, which is set to expire at the end of this month, could continue to save the average worker more than $80 a month if extended.
The House of Representatives hopes to have a bill ready tonight for the Rules Committee and passed off the floor by the weekend.
J.D. Foster, senior fellow in the economics of fiscal policy at the Heritage Foundation, told ABC News the Senate is, “as always, uncertain, but with the president pushing hard, one presumes they’ll get it done by the end of the month.”
“The public wants action, and the economy needs help,” Darrell West, director of governance studies at the Brookings Institution, told the Miami Herald.
Most of the major pieces of the legislation under debate are a continuation of current law, including the rates doctors are paid by Medicare, so they go into effect immediately. There is also a proposed reduction in the maximum unemployment benefits to 73 weeks from 99 for those hardest hit. Some of the policy changes associated with what is rumored to be the spending offsets will require time to implement, Foster said.
Officials estimate that another 10-month extension may cost the Treasury about $100 billion.
Though an extra $80 or so a month may sound like small change to some, Foster said the extension of the payroll tax holiday is significant for many families.
“Family budgets across the country are under intense pressure because of the lingering effects of a very weak economy. Payroll tax relief really helps in this regard,” he said.
However, said Foster, another extension does not extend help to the economy overall because there is still no such thing as a free lunch in fiscal policies.
“Families have more purchasing power, but government has to borrow the money that would have otherwise been collected in tax revenue, and that borrowing means dollar for dollar less capital available for the rest of the economy,” he said.