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Payroll Deal Shows a Battle-Weary Congress Payroll Deal Shows a Battle-Weary Congress

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Congress / CONGRESS

Payroll Deal Shows a Battle-Weary Congress

Plan is still tentative but would continue tax relief for millions.

The U.S. Capitol on Wednesday.(AP Photo/Haraz N. Ghanbari)

photo of Matthew Cooper
February 15, 2012

Correction: This article originally stated that 80 weeks of unemployment insurance would be available under the accord. 

 Americans can breathe at least a small sigh of relief now that Congress has reached a tentative deal to extend the payroll-tax holiday that has kept more money in workers' pockets. The cut in Social Security taxes that all wage earners pay has been a boon to individuals and a sluggish economy, but it was due to be rescinded later this month unless Congress came up with a deal. On Tuesday night they reached an agreement to extend the tax cut for another 10 months. Republicans dropped their demand that the tax cuts be paid for with offsetting spending cuts.

Politically, the deal reflects a Congress that seems to have tired of dramatic cliff-hangers like the three in 2011 that nearly led to, among other things, a government shutdown and a default on the national debt.

 

Meanwhile, the two sides edged toward agreement on two other matters. The first is an extension of unemployment benefits — an important measure because so many Americans hurt by the recession are threatened with being cut off from this income stream. On Tuesday night it looked like Congress extended the unemployment program so that individuals could collect up 99 weeks of unemployment insurance in states with extended benefits and up to 89 weeks for others, although that number could change in any kind of final deal. Unlike the Social Security tax cut, this would be paid for by offsetting spending cuts and some increased government revenue, such as proceeds from the sale of spectrum frequencies. Second, Congress seems to have solved the so-called “doc fix” problem by forestalling a dramatic cut in Medicare reimbursement rates for hospitals and physicians. 


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