Senate Democrats on Friday were finalizing a bill that would extend a reduced employee tax rate for 11 months. The measure will extend federal unemployment benefits and include a one-year “doc fix” preventing Medicare physicians from facing a pay cut, Senate leadership aides said.
Democrats expect Senate Republicans, who were meeting Friday evening, to accept the proposal, allowing Senate passage of the measure Saturday afternoon, along with expected approval of a fiscal 2012 omnibus spending bill.
Senate Democrats and Republicans were planning to meet separately on Friday night to review the tentative deal, and Senate Majority Leader Harry Reid, D-Nev., was already briefing members.
The House would likely follow early next week. But aides in both parties said several sticking points remained.
Democratic leadership aides said they will accept a House-passed provision requiring a White House decision within 60 days on whether to allow the controversial Keystone XL pipeline, but that the final deal will not include a provision that would delay regulations on industrial boilers—the so called Boiler MACT rule issued by the Environmental Protection Agency. President Obama last week said he would not accept the Keystone provision, but Democrats said they will argue, as Republicans have, that the language in the provision does not bind the White House, allowing them to put off the project by declaring it is not in the national interest.
Democratic aides said Senate leaders have proposed reducing the extension of the current 4.2 percent payroll tax rate from 12 months to 11 months to cut the cost of the bill. Negotiations Friday focused on how to pay for the measure; cutting the length of the extension reduces the offsets needed to fund the bill, making a deal easier.
“It’s a way to bring down the price,” a Democratic leadership aide said. The aide said the proposal had not yet been accepted by Republicans, but probably will be. If the Senate agrees on a longer-term deal rather than a two-month alternative developed by Reid as a backstop, the payroll extension “will probably be 11 months,” the aide said.
Unemployment benefits would be extended for between 59 and 99 weeks under the Democratic proposal, sources said.
Negotiations continued over how to cover the $21 billion cost of putting off a 27 percent pay cut to Medicare doctors for one year, but Democrats were set to grant a GOP request to fund the measure with health care-related cuts. Leadership aides said Democrats will not allow means testing for Medicare recipients, but will OK what one aide called a "hodgepodge” of other health care cuts. Medicare cuts to hospitals included in the House payroll bill and cuts to the 2010 health reform law, either in a fund earmarked for preventive medicine or from government insurance subsidies, are also likely to be included in the Senate package, aides and lobbyists said.
Leadership staffers said negotiations Friday were focused on extending a pay freeze for federal employees. Republicans were insisting on extending the freeze for at least a year, but Democrats said they would not allow inclusion of that pay-for. “Republicans are sticking on the pay freeze,” the Democratic leadership aide said.
While Democrats will accept many unemployment insurance “reforms” the House GOP approved, Democratic aides said a sticking point is GOP insistence on a requirement that unemployment beneficiaries face drug tests. Another sticking point is a provision requiring recipients of child tax credits to present a Social Security number—an attempt to block illegal immigrants from receiving the credits, the aides said. GOP aides would not confirm that those provisions are at issue.