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Congress / CONGRESS

Congress Passes 2012 Spending; Senate Moves Payroll Bill

Senate Majority Leader Harry Reid, D-Nev., earlier this week.(J. Scott Applewhite/AP)

December 17, 2011

The Senate on Saturday passed the final spending bills for 2012, eliminating the risk of a government shutdown until next fall, but Congress is poised to almost immediately resume the fight over a payroll tax cut and jobless aid after lawmakers failed to agree on anything longer than a two-month extension of those benefits.

The Senate passed the spending bill 67 to 32, and it now goes to President Obama for his signature. It funds the government for the final nine months of the 2012 fiscal year, which began Oct. 1.

It also passed a two-month extension of a payroll-tax holiday, unemployment benefits, and the "doc fix" to prevent Medicare physicians from a pay cut next year after talks on a longer extension collapsed Friday. That bill passed 89-10 and now faces a vote in the House, likely Monday.

 

The payroll bill is unpopular with many rank and file Republicans, but Senate leaders said they believe House Speaker John Boehner, R-Ohio, can ensure passage.

Still, GOP rank-and-file in the House expressed unease about the extensions, according to The New York Times. Members were upset that the payroll tax holiday takes money from the Social Security fund and needs to be reimbursed with general fund money, the Times reported. There was also consternation that policy riders important to conservatives were not included, the paper reported. 

President Obama praised the Senate for keeping the payroll tax cut alive but said it would be “inexcusable” for Congress to fail to extend it again, for the full year, when lawmakers reconvene in 2012.

"It is my expectation, in fact, it would be inexcusable for Congress not to further extend this middle-class tax cut for the rest of the year," he said after the vote. "It should be a formality, and hopefully it's done with as little drama as possible when they get back in January. This isn't hard."

That wish probably will not be granted. Senate Democrats said Saturday that a pitched public fight on the issue will benefit them politically. Democrats argue returning to the fight means they can make an election-year issue of an issue benefits them—delivering a middle class tax cut.

“We welcome the debate,” said Sen. Charles Schumer, D-N.Y., who heads Senate Democrat’s policy and messaging operation. “Republicans will hold back the middle class tax break at their peril, and their leaders know that.”

Electoral benefit or not, Democrats appeared to have compromised significantly, yielding the short-term bill.

The measure requires the White House to decide whether to authorize the construction of the controversial Keystone XL pipeline within 60 days - a Republican jab at President Obama, who last week said he would oppose a bill with Keystone language included. Obama backed off that threat in part because labor groups and many Senate Democrats support construction of the pipeline.

Schumer argued Saturday that the pipeline is a small price to pay for the payroll extension. Average families care about having “$1,000 back in their pocket, not whether some pipeline will be built.”

The bill covers the $33 billion cost of the two-month extension package with a long-term increase in fees on new mortgages backed by Fannie Mae and Freddie Mac, a quietly added provision that could cause consternation on both sides of the aisle. The increased fees are not directly imposed on homeowners, but banks will likely pass them on to people who sign mortgages, a Democratic policy aide told reporters. “We’re making it a little more expensive to use Fannie Mae and Freddie Mac,” the staffer said.

Many Republicans warned that the offset could make it even harder to reform or wind-down the failed housing agencies now under government conservatorship.

“This bill turns Fannie Mae, so troubled and under a cloud from the SEC, to a tax collection agency for the U.S. government,” said Sen. Mark Kirk, R-Ill., who voted against the package. The offset looks sure to also infuriate many House Republicans, who have objected to using long-term cuts to pay for short-term programs.

Many Democrats also grumbled about the deal.

“It makes no sense for two months to come back and fight the same fight we’ve been fighting for how long now,” said Sen. Joe Manchin, D-W.Va., one of only four Democrats who voted against the bill.

“I am furious and disgusted that anyone could imagine this stopgap measure is the best that Congress could offer hard-working Americans, seniors and the unemployed,” Manchin said in a statement.

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