Senate lawmakers on Friday approved a bill to extend the current 4.2 percent payroll tax through the end of 2012. Senators approved the bill by a vote of 60-36. The measure also extends prolonged jobless benefits and prevents payment cuts for Medicare doctors. After the House approved the bill, it was sent to President Obama for signature.
It appears as if the payroll tax cut extension will not have any offsets, according to Reuters, but extension of unemployment insurance and the “doc fix” will be paid for in some way. There are indications the payroll tax cut extension will be cleared by Congress before the end of this week.
By the end of the month, Congress must find some $160 billion in new spending cuts or new revenues for a 10-month extension of the payroll tax holiday, unemployment benefits and the doc fix, reports the National School Transportation Association (NSTA). This dollar amount is based on the House-passed version from late last year that includes a two-year doc fix.
The biggest obstacle the committee faces is how to cover the estimated $100 billion cost of a full-year extension. At this point, almost any pay-for is very controversial, NSTA stated. Some of the “pay-fors” that have recently been floated include: a federal employee pay freeze for civilians (House bill), spectrum auctions (House bill), a millionaires’ surtax (recently offered by Democratic Leader Nancy Pelosi), a repeal of oil and gas tax benefits for energy companies (President Obama’s State of the Union address); and a repeal of all or parts of the new health care law (House-passed measures).
“Some believe that the scope of pay-fors for this exercise will be more narrow than the range of options listed above. It is likely some balance of spending reductions and revenue increases will be necessary to achieve passage,” said NSTA.
Democrats want the surtax on individuals earning more than $1 million, while Republicans support the pay freeze for government workers.
“We may not be able to do all that we want to do if we cannot find agreement on how to pay for it,” Rep. Dave Camp (R-Mich.), chairman of the conference committee, said in a statement after the initial Feb. 1 meeting.
