Congress Extends Payroll Tax Holiday, Sends Bill to President

(Image Credit: J. Scott Applewhite/AP Photo)

After months of negotiations, Congress finally approved a comprehensive package to extend the Social Security payroll tax credit, unemployment insurance and the Doc Fix for Medicare doctors through the end of the year, delivering the bipartisan agreement to the president for his signature Friday with less than two weeks to spare.

By a bipartisan vote of 293-132, the House voted first this morning to approve the conference report. A short time later, the Senate voted to approve the bill, 60-36.

In total, 91 House Republicans voted against the measure, as did 41 House Democrats. Fourteen Senate Republicans voted in favor of the bill, while five Senate Democrats, including Sens. Ben Cardin of Maryland, Tom Harkin of Iowa, Joe Manchin of West Virginia, Barbara Mikulski of Maryland, Mark Warner of Virginia and Independent Bernie Sanders of Vermont voted in opposition.

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

The deal also extends the so-called 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 will be reduced periodically over the next year, from 99 weeks through May, up to a maximum 73 weeks of relief through December.

"On balance, I come down in favor of supporting what the President asked us to do, which he did do, what the American people want us to do," House Democratic Leader Nancy Pelosi said during debate on the floor. "This is the right thing to do, in terms of the payroll tax cut, and unemployment compensation, and our seniors.  And it's a recognition that the American people are watching and they have little appetite for us to be fighting over what they know is the right thing to do, which is to take every action we can to grow our economy."

Most of the top House and Senate leadership on both sides of the aisle voted in favor of the bill, except Democratic Whip Steny Hoyer, who opposed it because he believes federal employees absorbed too much of the sacrifice in offsetting some of the costs of the deal.

"Federal employees ought not to be the piggy bank out of which you pretend that we're going to be able to pay the deficit. That's wrong," Hoyer, D-Md., complained on the House floor. "Let us as conscientious members of this Congress, as representatives of our people, come together and have a plan that does not require nickel-and-diming federal employees, nickel-and-diming doctors, nickel-and-diming Medicare patients, nickel-and-diming America."

All Senate Republicans sitting on the committee that negotiated the deal voted against the package. The only House conferee that voted against the package was Rep. Chris Van Hollen. Like Hoyer and many other members from Maryland and Virginia, the Maryland congressman said he opposed the measure because he felt it unfairly targeted federal employees, a key constituency in the Washington metro area.

Sen. Ben Cardin, D-Md., also one of the payroll conferees, signed onto the conference report yesterday to allow the deal to proceed to a vote but voted against the bill today. Cardin objected to how the deal funds the $30 billion cost of the unemployment insurance extensions.

"In order to pay for that $30 billion, we picked on our federal work force," Cardin said on the Senate floor Thursday night. "I tell you, I find that wrong."

Sen. Mark Warner said that although he's glad the payroll tax credit was extended, he still voted against the measure because the payroll tax holiday was not paid for and reform of unemployment insurance will hit federal employees unfairly.

"I believe we could have found ways to pay for it - a surcharge on millionaires, a means test - so it would have been targeted more towards stimulus," Warner, D-Va., said. "Those parts of the legislation we just passed that we did pay for, things like unemployment benefits, we once again targeted a group that I think for too many in Congress becomes the payer of first resort, not payer of last resort, and that's our federal employees."

On Thursday night, Democratic Sen. Tom Harkin called the proposal the "devil's deal."

"This Congress will be making a grave mistake, a grave mistake and reinforcing a dangerous precedent by extending the payroll tax cut and adding another negative without paying for it," Harkin, D-Iowa, said. "I'm dismayed that Democrats, including a democratic president and a democratic vice president, have proposed this. And are willing to sign off on a deal that could begin the unraveling of Social Security."

House Speaker John Boehner and Senate Republican Leader Mitch McConnell both supported the measure, but criticized the president for failing to improve the economy and creating the necessity for an economic relief package.

"I voted to extend the temporary payroll tax holiday because I didn't want taxes going up next month on millions of Americans," McConnell, R-Ky., stated. "I don't think the American people should have to suffer any more than they already have as a result of this president's failure to turn the economy around more than three years into his presidency."

"This is an economic relief bill - not a growth bill," Boehner, R-Ohio, stated. "The only reason the provisions at the core of this measure are even necessary is because the president's economic policies have failed."

Thirty-one freshmen House Republicans voted against the agreement. Rep. Ron Paul, who is seeking the GOP nomination for president, missed the vote.