A big tax present for 160 million wage-earners

By Andrew Taylor

Associated Press

Published: Friday, Feb. 17 2012 4:15 p.m. MST

WASHINGTON — Americans are getting an election-year tax present. Congress voted with rare speed and cooperation Friday to extend a Social Security payroll tax cut for 160 million workers and to renew unemployment benefits for millions more who haven't seen a paycheck in six months.

With lawmakers' ratings in the gutter, the legislation sped through both the House and Senate and was on its way to President Barack Obama, who saluted the quick passage.

Taxpayers have grown accustomed to the 2 percentage point cut in the payroll tax over the past year — around $80 a month for someone earning $50,000 a year — and the reduction now will be continued. So will jobless benefits averaging about $300 a week for the long-term unemployed, though the aid will be cut off sooner than before for many recipients.

Both provisions, which were to expire in less than two weeks, had been extended only two months during a December congressional fight that seared Republicans. They were determined to avoid a repeat in campaign season.

The hard-fought — but ultimately bipartisan — measure contains the core of Obama's jobs agenda and promises to pump more than $100 billion into the economy before Election Day. It hands the president a political victory as well, as Republicans called a tactical retreat in hopes of minimizing the gains for Obama and his Democratic allies on Capitol Hill.

The Senate approved the measure on a bipartisan 60-36 vote minutes after the House passed it on a sweeping 293-132 vote. Obama is expected to sign it shortly after returning from a West Coast fundraising swing.

The hope is that the dual measures will inject consumer demand and support a fragile recovery from the worst economic downturn since the Great Depression. The legislation would also protect doctors treating Medicare patients from a steep cut in their reimbursements under an outdated funding formula, a reduction that threatened to make it harder for seniors to find physicians.

The tax cuts, jobless coverage and higher doctors' payments will all continue through the end of the year.

Many Republicans opposed some or all of the legislation but were eager to wipe the issue from the election-year agenda. The measure would pack $141 billion onto the federal deficit over 2012-2013 and slowly recoup more than $50 billion of that over the coming decade.

It may also be the last major bipartisan legislation to make it through a bitterly divided Congress before Election Day. A pile of unfinished business — including expiring tax cuts, Pentagon budget disputes and another hike in the nation's borrowing cap — awaits after the election in what promises to be a brutal lame duck session that Capitol Hill veterans are already dreading.

"It is amazing what happens when Congress focuses on doing the right thing instead of just playing politics," Obama said at an appearance at a Boeing factory in Everett, Wash. "This was a good example, and Congress should take pride in it."

In fact, politics has been woven into the struggle over the legislation, which, along with the divisive GOP primary campaign and improving economic news, has coincided with a lift in Obama's poll numbers.

Friday's votes also cleared away a political headache for House Republicans, still smarting from the battle in late December in which they blocked a two-month extension of the tax cut and jobless coverage, only to retreat after being portrayed as standing in the way of a tax cut for every American who earns a paycheck.

Since then, Republicans have made it clear they didn't want a repeat of the December disaster.

"We're dumb, but we're not stupid," Sen. John McCain, R-Ariz., told reporters after he voted. "We did not want to repeat the debacle of last December. It's not that complicated." McCain voted no, in part because the measure gives television broadcasting companies $1.75 billion in exchange for freeing communications spectrum for auctions to wireless companies.

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