After months of wrangling, congressional leaders appear to be close to a deal on extending the payroll tax cut, unemployment benefits, and the so-called “doc fix” for Medicare physician reimbursements through the end of the year.
That would avoid a repeat of the near-debacle last December, when House and Senate leaders in both parties only managed to agree on a two-month extension following a series of legislative gambits aimed at pushing the other party into the corner. This year, the same pattern appeared to be repeating itself.
Negotiators held a series of meetings, but the same old outside issues continued to rear their heads. Many Democrats continued to insist on a millionaire tax to pay for the extension of the 2 percentage point cut in Social Security and Medicare withholding taxes to 4.2 percent.
Republicans continued to raise their own outside issues, including approval of the Keystone XL oil pipeline from Canada to Texas, a pay freeze for federal workers, the blocking of new rules from the Environmental Protection Agency on boilers, and drug testing of unemployment benefit recipients.
Now the two sides appear to be ready to put aside the political posturing and agree on a deal to prevent the average worker from seeing a $40 reduction in their paycheck. The main reason for the seeming compromise is that Republicans have dropped their insistence that the payroll tax cut be paid for with corresponding offsets. On the other hand, that just means it will add to the overall budget deficit. Democrats too gave in on extending unemployment benefits for another 99 weeks. Instead, the extension will likely be for around 73 to 75 weeks, depending on various reports.
While the deal may not be such a good thing for those worried about the ballooning budget deficit, and those on unemployment still have cause to fear a cutoff in benefits before they can find jobs in this tough economy, any deal on the payroll tax cut extension will provide more certainty for employers and employees alike. Not to mention their accountants and payroll services. Time is running out on the extension that was passed in December, and Congress is scheduled to go on recess with the holiday weekend approaching.
Let’s hope the two parties manage to put the final details on the pact in place before they start squabbling again over the details. After all, they still have an election ahead, and voters are likely to blame whichever party they hold responsible for a cut in their paychecks.
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