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Lawmakers reach deal to extend payroll tax cut

WASHINGTON — Calling quits to a bruising election-year fight, negotiators on Capitol Hill sealed an agreement late Wednesday on legislation to renew a payroll tax cut for 160 million workers and jobless benefits for millions more.

Sen. Max Baucus, D-Mont., announced the agreement, capping a long day of wrangling over final details of the measure, which is a top priority of President Barack Obama. The announcement paved the way for votes in both the House and the Senate this week.

The $150 billion measure represents a rare burst of bipartisanship in a bitterly divided Congress. It's a tactical retreat for Republicans, who were generally unenthusiastic about the legislation but eager to move beyond the issue. With the campaign season starting, they don't want Obama and Democrats in Congress to be able to claim that the GOP was standing in the way of a middle-class tax cut.

The legislation continues a 2 percentage-point cut in the Social Security payroll tax, renews jobless benefits averaging about $300 a week for people languishing for long periods on unemployment rolls and protects doctors from a huge cut in their Medicare reimbursements.

The measure carries a price tag of roughly $150 billion over the coming year, partly financed by new auctions of telecommunications spectrum to wireless companies and by requiring newly hired federal workers to contribute more toward their pensions. The pension provision was watered down from a version sought by House Republicans, and tentatively agreed to by key Democrats, that would have required current federal workers to contribute more to their defined benefit pensions.

Auctions of portions of the nation's airwaves to wireless companies would net another $15 billion or so.

Extending the payroll tax cut and renewing long-term jobless benefits were key planks in Obama's jobs program announced in September. The measures are intended to help the economy by giving people more money to spend, fattening a typical bimonthly paycheck by $40 or so and giving the unemployed critical cash that most of them turn around and spend immediately.

Lawmakers reach deal to extend payroll tax cut 02/15/12 [Last modified: Wednesday, February 15, 2012 11:53pm]
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