Senate Approves Payroll Tax Cut

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WASHINGTON (AP) — The Senate on Friday approved a two-month renewal of payroll tax cuts for every American worker and unemployment benefits for millions, steering President Barack Obama toward a convincing victory over Republicans controlling the House.

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The measure, expected to be cleared for Obama’s signature by the House almost immediately, buys time for negotiations early next year on how to pay for a year-long extension of the two percentage point payroll tax cut, the centerpiece of Obama’s jobs agenda.

It would keep in place a salary boost of about $20 a week for an average worker making $50,000 a year.

Successful passage in the House would cap a swift retreat by House Republicans. Their move to force a holiday season confrontation with Obama and Senate Democrats had threatened to hit 160 million workers with a tax increase on Jan. 1. But it backfired badly.

Just 24 hours earlier, House leaders had insisted the only way to prevent that tax hike and a phase-out of jobless benefits for people out of work for more than six months was to pass a full-year renewal.

Friday’s version of the bill would put off until January a battle over finding almost $200 billion in spending cuts and new fees to finance the 2-point Social Security tax cut, extend jobless benefits averaging around $300 a week and prevent doctors from absorbing a big cut in Medicare payments through 2012.

Those goals had been embraced by virtually every lawmaker in the House and Senate but had been derailed in a quarrel over demands by House Republicans for immediate negotiations on a long-term extension bill. Senate leaders of both parties had tried to barter such an agreement among themselves a week ago but failed, instead agreeing upon a 60-day measure to buy time for talks next year.

Thursday’s decision by House Speaker John Boehner, R-Ohio, to cave in to the Senate came after days of criticism from Obama and Democrats. But perhaps more tellingly, GOP stalwarts including strategist Karl Rove and the Wall Street Journal editorial board warned that if the tax cuts were allowed to expire, Republicans would take a political beating that would harm efforts to unseat Obama next year.

House GOP arguments about the legislative process and what the “uncertainty” of a two-month extension would mean for businesses were unpersuasive, and Obama took the offensive.

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