Bloomberg News

Senate Republicans Press Contractor Rule Repeal, Thune Says

October 18, 2011

(Updates with House plans starting in sixth paragraph.)

Oct. 18 (Bloomberg) -- Senate Republicans, countering President Barack Obama’s jobs package, are urging repeal of a requirement the government withhold 3 percent of payments to contractors starting in 2013, said Senator John Thune of South Dakota.

The measure would be the Republican alternative to legislation being pursued by Senate Majority Leader Harry Reid, a Nevada Democrat, which would provide state and local governments with $35 billion to hire and retain teachers and first responders. Reid may hold a Senate vote on it as soon as this week.

“Any time that the Democrats put amendments on the floor that have to do with what they perceive to be the correct way to get people back to work, we’ll be offering our types of alternatives, and I think the 3 percent withholding repeal would be a very good amendment for us to vote on,” Thune said of the Republican proposal, sponsored by Senator Scott Brown of Massachusetts.

The U.S. Chamber of Commerce has criticized the withholding requirement as burdensome to businesses and its repeal is one of the few areas of agreement between Obama and congressional Republicans. The debate will center on how to recover the repeal’s $11.2 billion cost to the Treasury over 10 years, as estimated by the congressional Joint Committee on Taxation.

Senate Republicans would use uncommitted federal funds -- except for those at the departments of Defense and Veterans Affairs -- to pay for the repeal.

House Repeal Legislation

The House is slated to take up similar repeal legislation. The Ways and Means Committee approved a measure on Oct. 13 that didn’t include a specific offset to pay for the repeal.

A separate bill approved by the panel the same day could emerge as the House’s preferred offset. That measure, which would make it tougher to qualify for government health benefits, would raise $13 billion over a decade.

Ways and Means Chairman Dave Camp, a Michigan Republican, hasn’t said whether he would seek to combine the two measures into a deficit-neutral legislative package.

The Senate bill is S. 1726. The House repeal bill is HR 674 and the health bill is HR 2576.

--Editors: Jodi Schneider, Jim Rubin.

To contact the reporters on this story: Kathleen Hunter in Washington at khunter9@bloomberg.net; Steven Sloan in Washington at ssloan7@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net


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