Payroll tax cut extension passed in Congress

Updated at 1:35 a.m. ET

Both the House and the Senate on Friday passed a two-month extension of the payroll tax, bringing an end to the political brinkmanship that delayed progress on the popular bill for weeks.

The bill passed is similar to the bill the Senate passed last week -- it will prevent a 2 percent increase in the payroll tax, extend unemployment benefits and prevent doctors from taking a cut in Medicare payments. House Republicans initially opposed the two-month extension -- arguing in favor of a full, one-year extension -- but after taking a political beating for holding up the bill, they struck a deal on Thursday to accept the Senate bill with added language to benefit small businesses.

"I hope this Congress has had a very good learning experience," Senate Majority Leader Harry Reid said after today's vote. "Everything we do around here does not have to wind up in a fight."

Shortly after the bill passed, President Obama signed it into law, freeing him to join his family in Hawaii for Christmas.

In remarks delivered at the White House after he signed the bill, Mr. Obama commended Congress for breaking the stalemate "just in the nick of time for the holidays," but he urged Congress to pass a full, one-year extension "without drama, without delay."

Extending the payroll tax cut will give Americans more money to spend, which will boost the economy, Mr. Obama said -- "a boost we very much need right now."

Republicans and Democrats now have two months to work out their differences over a longer-term payroll tax cut extension -- namely, differences over how to pay for it. Reid today said Congress "can pay for it in many different ways" but will have to be "somewhat inventive."

Reid announced the four Democratic senators he is appointing to a conference to negotiate the terms of the longer-term bill with the House: Sens. Ben Cardin on Maryland, Bob Casey of Pennsylvania, Max Baucus of Montana and Jack Reed of Rhode Island.

House Democratic leader Nancy Pelosi also named conferees today, appointing Reps. Sandy Levin of Michigan, Xavier Becerra of California, Chris Van Hollen of Maryland, Allyson Schwartz of Pennsylvania and Henry Waxman of California.

Friday's votes -- which could have been derailed by any one member objecting to the unanimous vote -- were conducted in nearly-empty congressional chambers.

Had Congress failed to act, some 160 million Americans would have seen the payroll tax, which funds Social Security, increase from 4.2 percent to 6.2 percent. That increase would have meant a typical family making $50,000 a year would have lost about $40 from each paycheck. The White House launched an aggressive campaign using that piece of trivia to drum up public support for extending the tax cut, asking citizens in an email, "What Does $40 Mean to You?"

Though House Republicans ultimately relented to the Senate on this issue, they won some significant concessions in the overall fight. For instance, the two-month extension includes a provision requiring President Obama to make a quick decision on whether or not to approve the controversial Keystone XL oil pipeline. Environmentalists adamantly oppose the transcontinental pipeline, and the president had intended to put off the decision until after the 2012 election.

The temporary extension passed in spite of continued grumblings from some Tea Party Republicans. "It seems the politics of demagoguery have won over policy and principle with the concession to enact tax policy on two-month basis," Republican Rep. Allen West of Florida said in a statement on Facebook. "This is a sad day for America and further evidences our continuing decline."

In his remarks today, Reid thanked Senate Republican leader Mitch McConnell for sticking to the compromise agreement Republicans and Democrats reached in the Senate, even after the House initially rejected the Senate's two-month extension. He also chided freshmen House Republicans for keeping up their objections to the bill.

"People wonder why the approval rating of this Congress is so low -- I don't wonder," he said. "Everything we've done this Congress has been a knock-down, drag-out fight."

[lg144]

GOP = GREEDY ONE PERCENT

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[Florian_Schach]

the payroll tax cut's extension is a bit of good news for the middle class that comes Just in time for the holidays. That being said, the government will still need to come up with a better long term plan in order to sustain the middle class. This tax cut needs to have another step or characteristic to it other than just continually raising taxes on one group over and over again. If this goes on for a long period of time it can cost us in other ways that won't be to our benefit in the future (http://eng.am/p1IF9I).. I think that people would like to see a series of solutions rather than just banking all their hopes on this one plan alone.

[RobAla]

Some have asked for a source regarding this so called "tax cuts" of 2 months being paid for by a permanent tax increase on home mortgages:

Associated Press: 12/17/11
WASHINGTON (AP) — Who is paying for the two-month extension of the payroll tax cut working its way through Congress? The cost is being dropped in the laps of most people who buy homes or refinance beginning next year.
The typical person who buys a $200,000 home or refinances that amount starting on Jan. 1 would have to pay roughly $17 more a month for their mortgage, thanks to a fee increase included in the payroll tax cut bill that the Senate passed Saturday. The White House said the fee increases would be phased in gradually.
The legislation provides a two-month extension of a payroll tax cut and long-term unemployment benefits that would otherwise expire on Jan. 1. It would also delay for two months a cut in Medicare reimbursements for doctors that is scheduled to take effect on New Year's Day. The House is expected to act on the bill early next week. Two more months of the Social Security tax cut amounts to a savings of about $165 for a worker making $50,000 a year.
To cover its $33 billion price tag, the measure increases the fee that the government-backed mortgage giants, Fannie Mae and Freddie Mac, charge to insure home mortgages. That fee, which Senate aides said currently averages around 0.3 percentage point, would rise by 0.1 percentage point under the bill. The increase will also apply to people whose mortgages are backed by the Federal Housing Administration, which typically serves lower-income and first-time buyers.

The higher fee would not apply to people who currently have mortgages unless they refinance beginning next year.

[RobAla]

This victory was really the Democrats getting a tax increase and being about to get away with the press calling it a tax cut. What they passed was a 2 month defunding of Social Security, paid for by a year long tax increase on home mortgages.

What can we expect in two months? At this rate, we can expect a year long defunding of Social Security - paid for by 10 years of tax increases on home mortgages. And the Democrat leaning press will call it a tax cut!

I agree that the pipeline deal should have been a separate deal. I want every bill to stand or fall on it's own merit (I hate riders). However, President Obama should have signed this deal for the American people immediately. Whether the pipeline deal would create 6,000 or 20,000 jobs, it would reduce the cost of oil for Americans and it would reduce our dependence on middle-eastern oil. It is ridiculous that President Obama has not agreed to this already. No one should have felt it necessary to link this pipeline to any other bill. It should be a done deal.

As for the 2 month deal, it is a remarkably stupid idea. Who makes a law that lasts for two months? Think about the negative impact on business having to make adjustments to payroll and accounting systems for only a two month situation. Think about the complications to doing taxes at the end of the year. For two stupid months??????

When I heard that Democrats wanted to defund Social Security and call it a tax cut, I asked myself why in the world would they be in favor of such a nutty idea. After I found out that it would be paid for by a year long increase in taxes on home mortgages I understood. This was about a tax increase all along. Whether the payroll cut in Social Security funding stays or goes away, the Democrats will probably have a permanent tax increase on home mortgages. But who in their right mind thinks that the housing market is healthy enough for a tax increase?

What a stupid mess. Social Security has money until 2016, and then it will begin to suck wind. By 2035, it will be bankrupt. Instead of restructuring Social Security so that it will be healthy for a long time, politicians are playing games with it. There is no way anyone should be playing around with defunding Social Security, and there is no way that anyone honest can call a year long tax increase on home mortgages a tax cut for Americans.

This is all a total load of crap. We have serious problems, and Washington is run by a pack of clowns.

Merry Christmas, President Obama.

[RobAla]

What they passed was a 2 month defunding of Social Security, paid for by a year long tax increase on home mortgages. Some tax cut.

[luadda22]

I guess I might have been wrong about the tax extension. Did you notice that the same day this passed, all the want-a-be gansters caused a riot trying to spend it on a new pair of $180 Air Jorden shoes (Nike has never made shoes in the United States, at least some of the stuff WalMart sells is made in the US). So much for the hyprocrisy of 99%'ers. The economy must not be as bad as they are claiming. And Obama thought they were going to spend that $20 a week on pizza night with the family, looks like he got punked.

[HappyHolidays1]

Are you one of the 1%?

[luadda22]

Nope, but still trying.

The one thing you don't have to worry about, this "tax holiday" will never go away (it helps the poor). They will continue it and just tax the rich. It may sound good on the surface, but the top 1% only make around $1.7 trillion per year, the Federal budget in 2011 was around $3.6 trillion. Tax them at 100% and you still come up short. Now with the nationa debt exceeding 100% of GDP, we are going to run out of other peoples money. With base line budgeting, our national debt and the interest, even if we taxed everyone at 100%, it could take 10 years to pay of the debt and fund the government for that time period. But as long as you tax some one else, but not me, I don't care. Even Obama said the "EVERYONE has to have skin in the game".

[occupy_cbs]

Tired_of_liars:
"Dan, You want your pension, yet you do not want seniors to collect Social Security? If you are ok with getting rid of Social Security then you should be ok with giving up your pension."

=====
independent8:
"Dan--you are probably writing from the psycho ward of from Fox Right Wing News studios. You talk complete nonsense!"
=====



Yes, dan does seem to be one of our most delusional conservatrolls here, rabidly attacking those retirees on SS/MC, yet very happy to be getting his government check and socialized health care.

Seems that entitlements for dan are fine and deserved, yet those for older retirees should be ended immediately! He hates old people!

[occupy_cbs]

bmallen3: "First of all the war real cost was closer to $400B over 10 years."



Absolutely nothing you fox/rush parrots spew is close to being correct.


Cost of war at least $3.7 trillion and counting

The final bill will run at least $3.7 trillion and could reach as high as $4.4 trillion, according to the research project "Costs of War" by Brown University's Watson Institute for International Studies. (www.costsofwar.org)

http://www.reuters.com/article/2011/06/29/us-usa-war-idUSTRE75S25320110629

[occupy_cbs]

MarineVet46: "Why do the anti American GOP economic terrorist pimps for the 1% insist on a bill combining a middle class tax cut with a Canadian company being allowed to confiscate American land for a Koch brothers pipeline?"



Amazing that the fox/rush parrots continue to spew all the debunked propaganda, from totally exaggerated job creation numbers, to even a lowered dependence on foreign oil and lowered gas prices.

Come on parrots, this is an EXPORT pipeline, designed to carry heavy, sour tar sands oil to the gulf, in order to refine it into diesel for EXPORT for higher tax-free profits by BIG OIL -- which means that WE THE PEOPLE lose!

[baileyccc]

You can tell we are getting close to an election. These republicans needs to start thinking about saving their jobs and moves like this one are very positive for them.

However, the bell has toll, the Obama landslide with his coat tails sweeping these clowns out of office is on the horizon.