Fri, Feb 17, 2012 - Page 7 News List

US Congress agrees rare deal on payroll tax cuts

AP, Washington

US congressional negotiators ended a bruising election-year fight and sealed an agreement late on Wednesday on legislation to renew a payroll tax cut for 160 million workers and jobless benefits for millions more, a top priority of US President Barack Obama.

The US$150 billion measure represents a tactical retreat for Republicans, who were generally unenthusiastic about the legislation, but eager to move beyond the issue.

With Obama up for re-election in November, they did not want the president and Democrats in Congress to be able to claim that Republicans were blocking a tax cut for middle-class workers.

Democratic Senator Max Baucus and Republican Representative Dave Camp announced the agreement, a rare burst of bipartisanship in a bitterly divided Congress that paves the way for votes in both the House of Representatives and the Senate this week.

Extending the payroll tax cut and renewing long-term jobless benefits were key planks in Obama’s jobs program, which was announced last September, but has been largely ignored since.

The measures are intended to help the economy by giving people more money to spend, fattening a typical bimonthly paycheck by US$40 or so and giving the unemployed critical cash that most of them spend immediately.

The deal would continue a 2 percentage point cut in the payroll tax that pays for federal Social Security pensions and renew unemployment benefits averaging about US$300 a week for people languishing for long periods on unemployment rolls.

Republican House Speaker John Boehner said the legislation would probably be voted on by the end of the week.

Republican leaders had jump-started the talks over the weekend by dropping a demand that the tax cut be paid for with spending cuts.

Some rank-and-file Republicans continued to grumble that the measure was flawed and that the payroll tax cut, first enacted in December 2010, has done little to prop up the economy. However, the prevailing instinct among Republicans was political survival and not wanting to look like they were getting in the way of an election-year tax cut.

Republicans claimed victory in reducing the number of weeks of jobless benefits that workers would be eligible to receive.

The maximum number in states with the highest jobless rates would be cut from 99 weeks to 73 weeks by the end of the year, according to aides in both parties. Republicans had wanted to cut the maximum to 59 weeks.

Negotiators also dropped House-passed language that would have forced those on low incomes to have Social Security numbers in order to get government checks by claiming the children’s tax credit, a move that was aimed at illegal immigrants and caused a furor among many Hispanics.

The measure is partly financed by new auctions of the telecommunications spectrum to wireless companies and by requiring newly-hired federal workers to contribute more toward their pensions. The pension provision was demanded by Republicans.

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