Senate approves two-month extension of payroll tax holiday

The Senate on Saturday morning approved a two-month extension of the payroll tax holiday, the centerpiece of President Obama’s jobs agenda, setting up Congress to revisit the contentious issue next year.

The legislation would also extend unemployment benefits and freeze scheduled cuts to doctors’ Medicare reimbursements until March. It was approved by a vote of 89-10.

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Sens. Bob Corker (R-Tenn.), Jim DeMint (R-S.C.), Ron Johnson (R-Wis.), Mark Kirk (R-Ill.), Pat Leahy (D-Vt.), Joe Manchin (D-W.Va.), Jerry Moran (R-Kan.), Bernie Sanders (I-Vt.), Jeff Sessions (R-Ala.) and Richard Shelby (R-Ala.) voted against the package.

Sen. Rand Paul (R-Ky.) did not vote. 

The bill now awaits approval next week by the House of Representatives. Senate aides expect House Speaker John Boehner (R-Ohio) to agree to the proposal but he will not do so formally until he has had a chance to consult with members of the House GOP caucus.

Senate Republican Leader Mitch McConnell (R-Ky.) won an important concession by pressing Democrats to include in the bill House-passed language to expedite construction of the Keystone XL oil sands pipeline.

The bill does not extend an array of expiring business tax provisions, which Senate leaders were negotiating as part of a possible deal to extend the payroll tax holiday for a full year.

The legislation is expected to cost around $30 billion and will be offset by increasing the fees that Fannie Mae and Freddie Mac charge mortgage lenders to guarantee repayments of new mortgage loans.


McConnell hailed the inclusion of the Keystone language.

“Here’s the single largest shovel-ready project in America,” McConnell said. “It is literally ready to go, awaiting the permission of the president of the United States.

“Some of the news outlets are calling this pipeline controversial. I have no idea why it could be called controversial,” McConnell added. “The labor unions like it. Many Democrats want it. It strengthens our national security by decreasing the amount of oil we get from unfriendly countries.”

Senate Majority Leader Harry Reid (D-Nev.) said he was one of the first members of Congress to oppose the project but he felt it was necessary to grant Republicans a concession to get extended tax relief and unemployment benefits.

“I was responsible for putting it in this bill,” Reid said. “That’s how legislation works. I would  also say that we’re thankful that we’ve worked together to make sure that 160 million people have not a tax increase but a continued tax break. And I’m also thankful that the lifeline for unemployed people is going to continue for at least 60 days."

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The Congressional Budget Office released a score for the bill just before the vote. The budget agency estimated the legislation would reduce the deficit by nearly $3 billion. 

Reid had attempted to postpone the vote until 10 a.m. to give the CBO time to finish its official cost estimate but Sen. Bob Corker (R-Tenn.) objected.

Reid had attempted a last-minute switch of the order of votes by proceeding first to a $915 billion omnibus spending bill, instead of the payroll tax holiday package.

Reid, however, also proposed making passage of the spending legislation contingent on subsequent approval of the payroll tax holiday, evidence that Democrats have used the omnibus as leverage to pressure Republicans to accept extended payroll tax relief. Corker objected to this unusual sequence.

This story was last updated at 10:15 a.m.

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