By Vicki Needham - 12/17/11 02:07 PM EST
Advocates of extending unemployment insurance called the Senate's two-month tax and spending agreement reached on Friday a "tempered" victory.
Senate leaders agreed a short-term accord, after deliberating for the past couple of days, to extend the payroll tax cut, unemployment benefits and a Medicare "doc fix" for two months, as Congress looks to leave Washington in plenty of time before Christmas.
The deal means that unemployment benefits will continue to be paid for 99 weeks through the first two months of the year — instead of dropping to 79 weeks in January, as called for under a Republican-sponsored House-passed plan.
"The unemployed can rest assured that they will have benefits through February," Judy Conti, federal advocacy coordinator with the National Employment Law Project, told The Hill.
"It's not the best holiday present but it gets them through the first part of the year," she said.
The concern from supporters is that without a yearlong deal — or at least an agreement through the 2012 elections — is that the legislative posture will return to two- to four-month agreements, which leaves workers and states in a perpetual state of uncertainty about benefits.
In November, the economy created 120,000 jobs and the unemployment rate dropped to 8.6 percent.
But there are still only about 3 million jobs openings for an estimated 14 million job seekers, so making any decrease in federal benefits "grossly unfair," Conti said.
The inability of lawmakers to strike a longer-term deal came down to how to pay for the $190 billon package.
“We extended the payroll tax holiday as far as we could get credible ‘pay-fors," Senate Minority Leader Mitch McConnell (R-Ky.) said Friday. “Our friends on the other side had a lot of difficulty with credible ‘pay-fors’ for a larger package," he said.
"We wanted to make sure we didn’t have any gimmicks, that the ‘pay-fors’ were legitimate and would be agreed to by everyone were legitimate.”
The entire cost of the backstop legislation is a little less than $30 billion and it would be covered entirely by increasing the fees that Fannie Mae and Freddie Mac charge mortgage lenders to guarantee repayments of new mortgage loans, according to aides and lawmakers.
Leading senators had spent the day discussing a broader deal that would last 11 months — through the November election that would, most likely, put any additional reauthorizations into the hands of a lame-duck Congress after the 2012 elections.
But they gave up after they were unable to get past a key stumbling block — offsetting cuts to pay for the overall $190 billion package.
On Friday night, Senate Republicans said they were unaware of the 11-month package idea.
Even if there was an aggressive plan to fill all of those jobs, 11 million people would still be out of work, Conti pointed out.
"Essentially lawmakers are punting instead of trying to score a touchdown," she said.
Senate Majority Leader Harry Reid (D-Nev.) said Friday that "Democrats have worked tirelessly to prevent a thousand-dollar tax increase on middle-class families, but my Republican colleagues wouldn’t agree to long-term tax relief unless Democrats agreed to cut Medicare benefits for seniors."
The Senate on Saturday passed the two-month deal and "for the next two months, Democrats will work to extend the middle-class tax cut through the end of the year," Reid said.
"Republicans can either join us, or explain why they want middle-class families’ taxes to go up.”
The Obama administration signaled it willing to accept the two-month deal churned out by the Senate.
A senior administration official said the deal meets the test of seeing that 160 million taxpayers who won't see their taxes go up on Jan. 1.
"This is an important step toward enacting a key provision of the president’s American Jobs Act and a significant victory for the American people and the economy, because as independent analysts have said, failing to extend this tax cut would have had a damaging effect on our recovery and job growth," said White House Communications Director Dan Pfeiffer.
House and Senate Democrats had voiced strong opposition to the immediate cut in weeks of unemployment benefits, as well as an additional cut of 20 weeks — dropping down to 59 weeks by the summer.
House Ways and Means ranking member Sandy Levin (D-Mich.) told The Hill on Friday that drug testing and GED requirements were off the table in negotiations, two components of the House-passed bill.
"We are fighting to preserve the program," he said.
Advocates for the unemployment insurance extension have conceded that a compromise bill will probably include fewer than the 99 weeks they want.
Supporters, including Bill Samuel, government affairs director at the AFL-CIO, said he expected a compromise to come in between 79 and 85 weeks.
Democrats in both chambers along with unemployment benefits advocates are pressing for a continuation of the maximum of 99 weeks — that includes a maximum of 26 weeks provided by the states and up to 73 weeks for those in states with, usually, double-digit unemployment levels.
The Republican package cut benefits to 79 weeks beginning in 2012 with another 20-week decrease to 59 weeks in the summer, a move Democrats have said they strongly oppose.
Talk around the Capitol hallways has been that a compromise could mean about 79 weeks of federal benefits — in line with a 20-week cut mentioned by President Obama in his jobs bill.
That is a possibility when lawmakers resume negotiations in February, which is expected to be heated over the cost of the extension and how to pay for it.
About 10 states still have unemployment rates above 10 percent, although Georgia announced Friday that the state's jobless rate had dropped from 10.2 percent to 9.9 percent, the largest decrease in state history.
Senate Democrats expressed confidence on Friday night that they have the upper hand in February, especially on the millionaires surtax that, which has, so far, has been rejected in the upper chamber, as few other options remain on how to pay for the bill.
Democrats were opposed to further cuts to the federal workforce, while Republicans refused to consider any tax increases.
So don't expect a quick and fast fight in February.
"We'll fight this again when it comes up in two months and I think the public is going to be on our side," said Tom Harkin (D-Iowa), chairman of the Health, Education, Labor and Pensions Committee.
Speaker John Boehner (R-Ohio) said he will consult with rank-and-file members of his party before signing off on the agreement, according to GOP sources.