House Republicans release payroll-tax package under Obama veto threat

House Republicans on Friday released their legislation to extend the payroll-tax cut, reform and extend unemployment insurance and delay changes to the Medicare reimbursement rate for doctors.

The House Rules Committee scheduled a hearing on the legislation for Monday to craft procedures for its consideration on the floor. A vote could then come as early as Tuesday. The 369-page bill is titled the Middle Class Tax Relief and Job Creation Act of 2011 and is sponsored by Rep. Dave Camp (R-Mich.), chairman of the tax-writing Ways and Means Committee. 

The legislation will add $25.3 billion to the federal deficit over the next 10 years, according to the Congressional Budget Office. The congressional scorekeeper also noted that the bill includes lower caps on discretionary-spending ceilings agreed to in the summers debt-ceiling deal that could reduce the deficit by $1 billion. But CBO cannot include those assumptions in its official score, it said, because they are subject to the enactment of future legislation.

The CBO estimate could be a problem for GOP leaders, who already face resistance from party members who do not wish to extend the payroll-tax cut, a top priority for President Obama. 

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GOP leaders voiced confidence Thursday that the bill could pass, although many Democrats are expected to oppose it and Obama has signaled he would veto it because of a provision that forces the administration to fast-track a permit decision on the Keystone XL oil sands pipeline. The Obama administration has delayed a decision on that development until after the 2012 election, angering Republicans who say it would create thousands of American jobs.

White House press secretary Jay Carney on Friday refused to say whether Obama would veto the legislation. The White House has issued no official veto threat for it.

While House Minority Leader Nancy Pelosi (D-Calif.) planned to denounce GOP leaders over the bill Friday, the chairman of the Congressional Black Caucus, Rep. Emanuel Cleaver (D-Mo.), said on MSNBC he might support it. A Cleaver spokeswoman, Stephanie Young, got in touch with The Hill after his appearance to say the congressman misspoke and that he does not and will not be supporting this bill.


Even as they girded for a confrontation with Obama over the Keystone provision, House GOP leaders sought to align their proposal with measures that the president or congressional Democrats have endorsed. Majority Leader Eric Cantor’s (R-Va.) office circulated a chart claiming that more than 90 percent of the savings used to pay for the GOP bill come from “ideas that the president himself has proposed, or are close variations.”

The biggest difference is the omission in the GOP bill of the surtax on millionaires that Democrats have pushed and which Republicans have long rejected. GOP aides have said that once the Senate Democrats drop that demand, a deal could come together quickly.

The areas of common ground that Republicans cited include reforms to unemployment insurance, change to federal retiree benefits and additional fees for Fannie Mae and Freddie Mac.

The Keystone provision is the first measure in the bill. It directs the president to grant a permit for the pipeline within 60 days. But it does not force his hand completely. The president, according to the legislation, is not required to grant the permit if he determines that the pipeline “would not serve the national interest.” In that event, Obama would have 15 days to submit a report to Congress explaining his decision.

Senate Majority Leader Harry Reid (D-Nev.) immediately dismissed the legislation, citing the Keystone provision.

“With the middle class facing a huge tax increase on the first of January, now is not the time to be debating unrelated measures like an oil pipeline,” Reid said Friday in a news release. “If the House sends us their bill with Keystone in it, they are just wasting valuable time because it will not pass the Senate.”

The bill extends for one year the 4.2 percent rate for the payroll tax enacted in 2010, down from its typical 6.2 percent. It extends unemployment insurance benefits while gradually reducing the length of time they can be claimed from 99 weeks to 59 weeks in a two-step process. 

The measure also requires beneficiaries to continually search for work and participate in re-employment services. And it allows states to require drug testing as a condition of receiving unemployment benefits.

Among other provisions aimed at wooing conservatives, the legislation goes after the healthcare reform law by repealing $8 billion in mandatory funding and otherwise cutting $34.9 billion for implementing the law.

The legislation includes language that would delay and potentially weaken Environmental Protection Agency air-pollution regulations for industrial boilers and incinerators.

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Republicans and some centrist Democrats have pounced on the rules, arguing they will impose unnecessary burdens on industry and cost thousands of jobs.

But EPA says revised boiler regulations announced last week aimed at reducing harmful air pollutants such as mercury and soot would only apply to about 1 percent of the country’s boilers and would offer major public health benefits.

To offset the tax cut and new spending, the legislation extends a pay freeze for federal workers, prohibits millionaires from receiving unemployment benefits and food stamps, restricts benefits to illegal immigrants and gradually increases Medicare premiums for the wealthy. It also changes the co-payment structure for certain federal retirees, raises fees for Fannie Mae and Freddie Mac and raises revenue through spectrum auctions.

— Andrew Restuccia, Alicia M. Cohn and Erik Wasson contributed to this report.

— This story was originally posted at 11:51 a.m. and last updated at 6:39 p.m.