Bloomberg News

House-Senate Negotiators Announce Payroll Deal Completed

February 24, 2012

(Updates with Cardin comments starting in fifth paragraph.)

Feb. 16 (Bloomberg) -- Congressional negotiators said they agreed on a plan to extend a payroll tax cut and expanded unemployment benefits through the rest of the year.

“We have reached an agreement,” House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, told reporters early today after a meeting in the Capitol. “We’re confident this can be concluded.” He was joined in announcing the agreement by Senate Finance Committee Chairman Max Baucus.

The plan would extend the two-percentage-point payroll tax break for workers through Dec. 31 without covering the $94 billion cost, Representative Kevin Brady, a Texas Republican, said two days ago when the initial plan was announced.

It would continue expanded unemployment benefits while gradually reducing the maximum number of weeks people can collect payments and avert a 27 percent cut in doctors’ Medicare reimbursements through the rest of this year. Those would be paid for with reductions elsewhere in the budget.

Senator Ben Cardin, a Maryland Democrat on the negotiating committee, staged a last-minute revolt against the agreement late yesterday over a provision that would require federal workers to pay more toward their pensions. Maryland has a high concentration of government employees.

Cardin told reporters today he spoke with President Barack Obama yesterday about his concerns, though he didn’t describe the conversation. He said he is “pleased” the deal was changed to apply the pension provision only to new federal workers.

Van Hollen

Obama called Representative Chris Van Hollen, another Maryland Democrat on the conference committee who fought the pension provision, and told him it would only affect future government employees, according to a Democratic aide with knowledge of the conversation.

“It’s important to move forward,” Van Hollen and Cardin said in a joint statement today. “But it is inherently unfair that the primary offset found for extending unemployment insurance came from additional sacrifice from other middle-class families rather than the very wealthiest Americans.”

Senate Majority Leader Harry Reid, a Nevada Democrat, said in a statement that the proposal “will keep our economy moving forward just as it is beginning to gain steam.”

The tax cut and extended benefits are set to expire at the end of this month without a congressional deal.

‘Fair Agreement’

House Speaker John Boehner today called the plan a “fair agreement” and that lawmakers were discussing how soon it can be put to a vote. Senate Democratic leaders plan a vote this week, a party aide with knowledge of the talks who wasn’t authorized to speak publicly said yesterday.

“I think it’s something I would support,” said Senator Scott Brown, a Massachusetts Republican. “There’s no sticking point.”

Obama this week urged Congress to act soon on the tax cut and unemployment insurance. He said lawmakers shouldn’t raise Americans’ taxes with the recovery still fragile,

The payroll tax cut issue has dogged Republicans since December, when the party initially rejected an extension and was blamed for almost allowing the break to expire. Under political pressure, Boehner agreed to an extension through Feb. 29 to let negotiators work on a longer-term measure.

Other Republicans have repeatedly said that the entire payroll package, with a 10-year price tag of as much as $160 billion, must be financed with other spending reductions.

First Responders

Senator Frank Lautenberg, a New Jersey Democrat, said the inclusion in the deal of a dedicated spectrum allocation for emergency first-responders was a victory for New York-area lawmakers who had been pushing for it since the Sept. 11 terrorist attacks.

“We saw firsthand on 9-11 what happened when units can’t communicate among themselves,” Lautenberg said in an interview.

Senator Barbara Mikulski, a Maryland Democrat, said she was leaning against supporting the plan. She said she was “very unhappy” with methods of financing it, particularly cuts to hospitals, clinical labs and nursing homes.

“It penalizes those who serve those people who currently can’t pay their medical bills,” Mikulski said.

Accusing Democrats

Asked yesterday why Republicans dropped their insistence on financing the payroll tax cut extension with almost $100 billion in spending cuts, Boehner, of Ohio, accused Democrats of holding up an agreement to inflict more political damage on his party.

The proposal would continue 99 weeks of unemployment benefits through May for states hardest hit by joblessness, according to a document spelling out the plan, provided by a Democratic aide. As many as 79 weeks of jobless benefits would be provided through August and as long as 73 weeks through December, according to the document.

Only states with unemployment rates exceeding 9 percent would offer up to 73 weeks of jobless benefits, said a Republican aide, speaking on condition of anonymity. Under the tentative deal, 36 states would be allowed to offer up to 63 weeks of jobless benefits, the aide said.

The agreement would let states require drug testing for beneficiaries who lost a job for failing or refusing to take a drug test, the Republican aide said.

It also would require states distributing federal welfare payments to bar recipients from using their electronic-benefits cards to withdraw funds from automated-teller machines in strip clubs, gambling casinos and liquor stores, the Republican aide said.

--With assistance from James Rowley and Laura Litvan in Washington. Editors: Laurie Asseo, Joe Sobczyk

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

To contact the editor responsible for this story: Laurie Asseo at lasseo1@bloomberg.net


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