It wasn’t easy, and there were times yesterday when the deal was in doubt, but shortly after midnight, as Tricia noted earlier, bipartisan talks produced an agreement on extending the payroll tax break through the end of the year.
Members of a House-Senate committee charged with writing a measure to extend a payroll tax reduction said Wednesday that their work was done, just shy of an hour before their deadline to get a bill ready for a Friday vote.
After fighting until the very final hour over how to pay for parts of a $150 billion plan that would also extend unemployment benefits and prevent a pay cut for doctors who accept Medicare, leaders of both parties put together a bill that the majority of the committee could support.
Though passage is not assured – in this Congress, nothing is ever assured – officials in both parties expressed optimism about the outcome. Because the package will be approved by a conference committee, the deal will reach the floor of both chambers without amendments or changes, which should expedite the process.
The agreement, which many believe will be the last significant legislative achievement of 2012, represents a win for the White House – this was a key element of President Obama’s American Jobs Act – and serves as the only real example of this Congress reaching a major bipartisan compromise.
So, what’s in it?
* Payroll tax cut: The deal will extend a 2% cut to the Social Security payroll tax, at a cost of about $100 billion, giving the typical American worker roughly $1,000 more in take-home pay this year. How will this be paid for? It won’t be – GOP leaders, in a concession that made the larger deal possible, agreed this week that the cost of the cut need not be offset at all. (An equivalent to the amount that would have been received from the payroll tax will be transferred into the Social Security trust fund from the general fund.)
* UI and the “doc fix”: The other two major elements of the larger package were also approved, including an extension of unemployment benefits. As part of the compromise, however, Republicans were able to reduce maximum eligibility from 99 weeks to 73 weeks.
* Financing: To pay for the non-payroll provisions, lawmakers agreed to sell radio spectrum licenses, as well as forcing new federal workers to pay more into their government pensions. Dems gave up on the millionaire/billionaire surtax fairly early in the process.
* Extraneous measures: Republicans wanted new education requirements for beneficiaries, but didn’t get them. The GOP is not leaving completely empty-handed, though – states will be allowed to conduct drug tests on those who lost their jobs for failing a drug test (states can already do this) and must prevent welfare aid from being spent at casinos, liquor stores, or strip clubs (states have already done this).
Cutting through the clutter, the bottom line is pretty straightforward: Democrats and economists didn’t want the economy to take a hit from an expiring payroll break, and once Republicans caved on the key point, a deal came together. If approved, the agreement will bring a sigh of relief to many concerned about 2012 economic growth.
A House vote should come tomorrow. While the Senate has not yet scheduled its vote, members are poised to be out next week, suggesting the deal should reach the floor no later than Saturday.