Congress approves payroll tax cut extension, sending bill to Obama

The House and Senate quickly approved the payroll tax cut bill on Friday, sending the legislation to the White House for President Obama's signature. 

Both chambers easily approved the measure. 

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In the House, the measure was approved in a 293-132 vote that split both parties. The vote was 146-91 among Republicans, and 147-41 among Democrats. 

The Senate acted less than an hour later and approved the bill in a 60-36 vote. Senate Republican and Democratic leaders agreed the bill would not require a 60-vote supermarjority for passage, a move intended to allow more Republicans to vote against the measure. In the end that procedural maneuver didn't matter. 

The passage secures an early-year election victory for Obama, who has seen his poll numbers rise during the fight over the payroll tax cut, which began last year. 

He praised Congress for the vote in comments at a Boeing plant in Washington state.

"It's a big deal. And I want to thank Congress for listening to the voices of the American people," Obama said. "It's amazing what Congress can accomplish when they focus on doing the right thing instead of playing politics."

He also said Congress had done the "right thing" in approving the bill, which he said he would sign. 

Obama then shifted to other tax issues, demanding that Congress consider some of the tax reforms he proposed in his State of the Union address. 

"Right now, companies get tax breaks for moving jobs and profits overseas. Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it. So my message to Congress is: what are you waiting for? Let’s get this done right now," Obama said.



House Republicans took a big political hit in December when they objected to a two-month extension agreed to by Senate Republicans. 


This week, House Republicans retreated, agreeing the payroll tax cut would not have to be offset with other spending cuts. The move led to Friday's quick votes, and the GOP hopes to put the issue to rest. 

On Friday, Speaker John Boehner (R-Ohio) sought to shift attention to Obama's handling of the economy. 

“According to the White House, when he signs this bill, he’s finished,” Boehner said. “For those of you who haven’t noticed, the president checked out last Labor Day and has been unengaged in leading our country ever since. It has been one nonstop campaign trip after another. So he can campaign all he wants, but the Republicans are going to stay focused on jobs.”

Besides extending through the rest of the year a two-percentage-point payroll tax cut, the bill would also extend unemployment insurance through 2012 and dodge a planned cut to physician reimbursements under Medicare. 

If "compromise" in Washington is defined as ensuring that both sides are unhappy, the payroll tax holiday bill, H.R. 3630, could be a textbook example. During morning debate, several Republicans bristled at the bill's failure to pay for the year-long extension of the payroll tax holiday.

"I cannot and will not support legislation that extends the payroll tax holiday without paying for it," Rep. Phil Gingrey (R-Ga.) said. "This will add $100 billion to the deficit."

The Congressional Budget Office put the tab at closer to $90 billion; regardless, dozens of Republicans were unhappy with the GOP leadership's decision to advance the payroll tax extension with no pay-for. Rep. Joe Barton (R-Texas) added today that extending the holiday without an offsetting spending cut would starve Social Security, as the payroll tax funds the Social Security Trust Fund.

"I'm not saying anything disparaging about the leadership on both sides of the aisle and the leadership in both bodies, but we are taking money away from the Social Security Trust Fund and we are substituting an IOU that may or may not ever be repaid," Barton said.

Democrats had their own complaints, most notably language that helps pay for the compromise bill by requiring federal workers who start their employment after 2012 to contribute more to their federal retirement package. Several Democrats, including House Minority Whip Steny Hoyer (D-Md.), said the bill unfairly singles out federal workers to help pay for the bill.

"Nobody is targeted in this bill other than federal employees," he said on the House floor. "That's not how you want to treat our employees, America's employees.

"We ought to stop dissing them, we ought to stop demagoguing them, we ought to stop using 'bureaucrat' as an epithet."

The bill would increase by 2.3 percent the employee pension contribution for federal employees who begin work after 2012, and make the same change for members of Congress who start work after 2012. But it would not require current federal employees to increase their retirement contributions, as the House GOP had hoped to require.

Some Democrats also complained that some House GOP-favored reforms to the unemployment insurance program made it into the bill, including language that would phase down access to federal employment benefits from 99 weeks to 73 weeks. 

It also contains GOP-supported language to prevent unemployment recipients from accessing their benefits in casinos, liquor stores and strip clubs, language Republicans say would reduce welfare fraud.

The most vocal opposition to the bill in the Senate came from Democratic Sen. Tom Harkin (Iowa). 

On Thursday night, Harkin, a fierce advocate for the integrity of the Social Security program, railed on Obama and Democratic leadership for agreeing to allow the payroll tax cut to be extended. The tax cut is used to fund the Social Security Trust Fund, which the Iowa senator argued could be depleted. 

“I never thought I would have to see the day when a Democratic president of the United States and a Democratic vice president would agree to put Social Security in this kind of jeopardy," exclaimed a visibly agitated Harkin from the Senate floor. "Never did I ever imagine a Democratic president would be the beginning of the unraveling of Social Security.”


—This story was posted at 11:39 a.m. and updated at 3:31 p.m.

Justin Sink contributed to this story.