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Congress Passes Payroll-Tax Holiday Extension Congress Passes Payroll-Tax Holiday Extension

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Congress Passes Payroll-Tax Holiday Extension


House Budget Committee Chairman Rep. Paul Ryan, R-Wis., left, and Rep. Jeb Hensarling, R-Texas walk to the House floor for the final vote on the payroll tax cut extension. (AP Photo/J. Scott Applewhite)

In a win for President Obama in an election year, the Senate joined the House in passing a $150 billion package extending an employee payroll-tax rate for the rest of the year. The conference report, which now heads to President Obama for his signature, also extends federal unemployment benefits and blocks a reimbursement cut for physicians who accept Medicare.

The bill passed the Senate 60-36. The House passed the bill, 293 to 132 minutes earlier.


Passage is a victory for Obama and congressional Democrats. Congressional Republicans bowed to political pressure and allowed the payroll portion of the package to be included without offsets. The payroll tax cut has been a key part of Obama’s campaign push for jobs legislation.

President Obama says he will sign the $150 billion package as soon as it reaches his desk.

The deal was actually agreed to mid-week, and finalized and endorsed by the conference committee on Thursday, ending months of battle as lawmakers faced expiration of a temporary extension of the three items at the end of the month.


The critical breakthrough was the concession by Speaker John Boehner, R-Ohio, and other House GOP leaders that they would not insist the $94 billion payroll extension part of the deal be paid for.

The payroll-tax cut has been a key part of Obama’s campaign push for jobs legislation. Under the agreement, the tax break would be extended for the rest of 2012, leaving it at 4.2 percent rather than letting it rise to 6.2 percent.

The package also puts off a 27.4 percent cut in payments to Medicare doctors, costing $17.9 billion over 10 years. It is funded in part by a $5 billion cut to a preventive medicine health fund in the health care law, and a $6.9 billion cut to Medicare hospitals for non-payment on premiums and co-pays.

And the legislation includes a three-tiered reduction in overall federal unemployment benefits that relies heavily on the unemployment rates in individual states. The agreement would provide a maximum of between 89 and 99 weeks of coverage from March through May of this year, in June the maximum would go to 79 weeks, and by September, it would fall to 73.


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