Senate Approves Two-Month Extension Of Payroll Tax Cut


congressSenate lawmakers today voted overwhelmingly to extend the payroll tax cut by another two months, after both sides were unable to reach a comprehensive agreement to extend the cuts and unemployment benefits for a full year.

The measure is the latest in a series of last-ditch temporary fixes, postponing another legislative showdown between lawmakers until February, when the bill’s provisions are set to expire.

President Barack Obama told reporters that he was pleased with Saturday’s vote, which passed 89-10, but added that extending the cuts and assistance through next year should be considered just a “formality.”

To do otherwise, he said, would be “inexcusable.”

Still, it’s unclear if lawmakers, mindful of upcoming elections, can reach a broader agreement that would include a full year of cuts and benefits.

Failure to pass the payroll tax measure — a major part of Obama’s job-creation plan — would have cost working Americans an average of $1,000 in higher taxes next year.

Senate Majority Leader Harry Reid, D-Nevada, said Friday that his party supported the proposed two-month deal because “that was the best we could get.”

The $33 billion deal, should it pass the House, also avoids cutting federal funds to physicians who accept Medicare and speeds up a decision over a pipeline, giving the White House 60 days to make a call on the controversial Keystone XL project.

But, according to a GOP source, House Speaker John Boehner was the only member of House leadership who described the Senate vote as “a good deal” and “a victory.”

Boehner’s comments were made during a post-vote conference call among Republican congressmen, and were supported by Oklahoma Rep. Tom Cole and N.C. Rep. Walter Jones.

But House Majority Leader Eric Cantor, R-Virginia, disagreed, saying he thought the package should be extended for a full year.

“The rank-and-file members are extremely opposed to it,” said one GOP source, adding that most members are concerned with the two-month extension, its affect on the middle class, and the political benefit the White House could gain in the national dialogue over taxes.

The pipeline, thought to be a necessary part of coaxing Republican support for the payroll tax break, is something the White House has threatened to veto.

When asked about the president’s support of the bill despite the pipeline provision, a senior administration official said Friday that Obama’s top priority was making sure taxes don’t go up in the new year.

The State Department has warned that a shortened deadline would leave insufficient time to assess the route alteration on a project that would transport oil from Canada’s tar sands in northern Alberta to refineries on the Gulf Coast of Texas.

Obama made no mention of the proposed pipeline during Saturday’s press conference. But in a briefing with reporters held after Obama’s remarks, senior administration officials called the vote a win for working people and insisted the administration had given no ground on the pipeline issue.

The White House had delayed until 2013 a decision on the project.

Senate Minority Leader Mitch McConnell, R-Kentucky, said he had no idea why the pipeline is considered controversial.

“The labor unions like it. Many Democrats want it,” he added. “It strengthens our national security by decreasing the amount of oil we get from unfriendly countries. And it wouldn’t cost the tax payers a dime.”

But the delay followed complaints by environmentalists and Nebraska officials that the pipeline route could threaten that state’s Sandhills region and vital Ogallala aquifer.

Alternate routes are being considered, and Nebraska officials as well as the pipeline company, TransCanada, acknowledge that the process of approving a final route will last into the second half of 2012.

Republicans, who traditionally back the oil industry, have accused the White House of delaying the issue until after Obama’s re-election bid. Labor unions that typically support Democrats back the pipeline project, while environmentalists who are also allied with the political left oppose it.

House Republicans pushed through their own version of a payroll tax measure this week that also included the pipeline provision.

Saturday’s Senate bill is expected to reduce the deficit by nearly $3 billion, according to the Congressional Budget Office.

Its $33 billion in costs are thought to be offset by an increase in fees that new homeowners with federally backed mortgages will pay to Fannie Mae, Freddie Mac and the Federal Housing Administration. Those entities would then turn that money over to the U.S. Treasury.

The bump amounts to about $15 per month for every $200,000 loaned, Senate aides estimated.

Boehner, R-Ohio, said Friday that any attempt for a short-term extension of the payroll tax cut and unemployment benefits would be altered in the House.

A House GOP aide said Saturday’s conference call after the Senate vote was held to weigh input from Republican members on next steps regarding the payroll measure.

“The Speaker described three possible options — accept the Senate bill, go to conference, or amend the Senate bill and send it back,” the aide said. “Members are overwhelmingly disappointed in the Senate’s decision to just ‘kick the can down the road’ for two months. No announcement was made regarding the schedule or plans.”

{Cable News Network/ Newscenter}