Lawmakers Sign Off on Payroll Tax Cut Deal

(Image Credit: ABC News)

Negotiators signed off on the bipartisan payroll tax deal this afternoon, paving the way for Congress to approve an extension of the tax holiday, reform unemployment insurance and extend the so-called doc fix for physicians treating Medicare patients through the end of the year.

After coming to terms in the midnight hour early this morning, members of the conference committee gathered in the Capitol with Rep. Dave Camp, R-Mich., and Sen. Max Baucus, D-Mont., the top two leaders on the panel, to sign the conference report Thursday afternoon.

"We have a majority, a majority of the members. It's a done deal. It's done," Baucus, D-Mont., proclaimed as he flashed two thumbs up to video cameras gathered to capture the moment. "For America! It's teamwork."

But so far, no Senate Republicans have signed off on the agreement, objecting because they believe they were shut out of the final negotiations. For some conferees, it was a surprise that no Republican senators had signed off on the deal so far.

"Aren't they going to sign it?" Rep. Fred Upton, R-Mich., asked Baucus as they walked out of the conference room after signing the report.

"I don't think so," Baucus whispered. "Jon [Kyl] told me he's not going to do it."

Camp, the chairman of the House Ways and Means Committee, deflected questions about Senate Republicans resisting the bipartisan compromise, calling the breakthrough a "positive moment" and declining to comment directly about the Senate GOP's concerns.

"The majority of the House has signed the conference report, so I'll continue to work with the Senate to see where we are at the end of the day, but I'm glad at least on the House side we have a majority," Camp said. "The conference report is done and I'm confident that we'll get the signatures we need to move this to the floor."

The deal prevents a two-percent tax increase on middle-class families. Over the course of the year, an individual earning $50,000 would enjoy a pay increase by $1,000 as a result of the extension. This aspect of the deal was not offset with spending reductions, adding about $100 billion to the deficit.

Aides close to the negotiations said the deal would also extend the doc fix through the end of the year, averting a 27.4 percent cut to physician payment rates and ensuring seniors and the disabled have continued access to the physicians serving our Medicare beneficiaries.

Furthermore, the agreement reforms unemployment insurance depending on the unemployment rate. Most states will receive a maximum of 63 weeks of benefits, compared to 46 states currently receiving 93 weeks of benefits now. But for states with higher unemployment rates, compensation is slowly reduced periodically over the next year, from 99 weeks through May, and up to 73 weeks of relief through December.

The deal also enables states to drug screen and test anyone who lost their job because they failed or refused an employer drug test, or who is seeking a job that generally requires a drug test. To help offset the extension of unemployment insurance, the agreement also requires new civilian federal employees and members of Congress to contribute more towards their defined benefit pension programs.

House Speaker John Boehner, R-Ohio, was also surprised to learn that Senate Republicans felt shut out of the negotiations.

"Everything that I've seen they've been [as] involved in the process as anybody else," Boehner said. "There was an awful lot of conversation going on. As a matter of fact, if I recall correctly, there were two or three public meetings where they were all present, so for someone to say they weren't involved really would surprise me."

The speaker said that he is working with members on both sides of the aisle to determine how quickly the House could vote to pass the deal. The Senate is expected to vote Friday.

Democratic Leader Nancy Pelosi, D-Calif., urged the speaker to bring the bill to the House floor for a vote Friday before Congress skips town for a week-long President's Day recess.

"It would be important to bring it up tomorrow because I don't think the American people can wait another day." Pelosi said. "We should bring it up as soon as possible so all doubt is removed that we will have a tax cut for 160 million Americans, that unemployment insurance will continue for our workers who have lost their jobs through no fault of their own and that seniors can see their doctors under Medicare."

Pelosi also indicated that she believed her caucus could support the legislation.

"The fact that we have the three features that we asked for," she said. "I don't see a scenario where our members will vote against it."

After battling Democrats for months over the particulars of how to offset the costs of the extensions, Boehner blamed President Obama for failing to repair the economy and leading Congress into a corner where lawmakers had little choice but to pass an economic relief package.

"Let's be honest. This is an economic relief package, not a bill that's going to grow the economy and create jobs," Boehner said. "Last fall, I said that the only reason we're even talking about a payroll tax break or an extension of unemployment benefits is because the president's economic policies have failed. I still believe that to be the case today."

Boehner signaled that he intends to support the agreement, but said the deal would have been unnecessary had the president followed through on his promises to improve the economy.

"That judgment's not made based on my standard," Boehner said. "The president said that if we passed his stimulus bill that we passed three years ago, unemployment would not exceed 8 percent. He also predicted that at this point in the recovery, unemployment would be at six percent. He claimed that his stimulus bill would create millions of jobs immediately, yet there are about 4 million Americans who have lost their job since."

The speaker criticized the White House for calling the payroll tax credit extension its last must-do item on the president's agenda before next fall's election, and he urged President Obama and Senate Democrats to consider more of the GOP's House-passed legislation that they believe would spur job creation.

"For those of you who haven't noticed, the president checked out last Labor Day and has been unengaged in leading our country ever since. It's been one non-stop campaign trip after another," Boehner said. "He can campaign all he wants, but the Republicans are going to stay focused on jobs and the types of pro-growth policies that will help small businesses grow and put Americans back to work."

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