The payroll tax cut extensions are going nowhere fast… A vote last night by Republicans on the House rules committee will prevent a direct vote today on the Senate plan to extend the cuts by a ridiculous two months. So if you were looking for an update, go about your business today, there’s nothing to see.
But if you haven’t been following along, let me get you up to speed.
Last year, Congress voted in a payroll tax holiday to replace the expiring Making Work Pay Credit. The payroll tax holiday (or the payroll tax cuts) meant that, on the employee side, payroll tax contributions for federal purposes are reduced by 2% for 2011: instead of paying in at 6.2% for Social Security taxes, contributions for 2011 are 4.2% for Social Security taxes. Contributions for Medicare remain the same. The provision also applies to the self-employed. That worked out to about $1,000 more in pocket for the average family.
As Congress is fond of doing, apparently so that they can fight over it every year, that tax provision, like the Making Work Pay Credit, was limited and is set to expire on December 31, 2011.
President Obama wanted to see the payroll tax cuts extended and the Democrats even considered a corresponding cut on the employer side in order to keep the economy moving. Those kinds of moves are awfully expensive and were initially opposed by the Republicans.
And then the politicking began in earnest. The Democrats insisted on tacking on an income surtax for millionaires (the “millionaire’s tax) which was eventually dropped. The Republicans maneuvered to attach approval to the Keystone XL pipeline, which remains part of the negotiations.
The House eventually passed a bill that would extend the payroll tax cuts for one year. The same bill was chock full of other goodies, including extensions for jobless benefits, the so-called “Doc Fix” to block a drop in payments to physicians who accept Medicare a! nd exten ding bonus depreciation for businesses. The bill would pay for itself with a number of provisions including pay freezes for federal employees and the elimination of the child tax credit for illegal immigrants.
The Senate passed its own version of the bill which extended the payroll tax cuts by two months – not even a full payroll tax quarter.
House Speaker Boehner (R-OH) didn’t like the Senate’s version of the bill (er, eventually didn’t like it) and pushed for a full year extension. But Senate Majority Leader Harry Reid (D-NV) cried foul, claiming that the Republicans had backed out of a bipartisan compromise, and promised that the Senate would not take up the matter until the House came around.
Only, the House isn’t coming around. Instead, after a meeting, the Republicans are holding fast. The Democrats have, in return, indicated “99% approval” of the Senate’s version of the bill, which remarkably passed with a 89-10 vote: a bipartisan effort to vote stupid.
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