Both chambers of Congress approved a bill Friday to extend the payroll tax rate reduction, unemployment benefits, and prevent medicare funding cuts through the end of 2012. Congress will now send the bill to President Barack Obama to be signed into law.
The $150 billion bill will allow taxpayers to keep receiving their paychecks with the two percentage point cut to social security taxes.
Additionally, the bill prevents a 27 percent reduction to government funding of medicare payments to doctors who treat medicare patients.
Congress and the White House agreed on a two month extension of the payroll tax cut in late December. That agreement would have expired at the end of February without the action of both chambers of Congress Friday.
After bitter bipartisan disagreements almost prevented the two month extension from occurring in December, lawmakers acted more swiftly in passing the 10 month extension Friday.
The House passed the bill with a 293-132, and the Senate quickly followed up with a 60-36 vote.
In the Republican dominated House, a total of 91 Republicans voted against the measure, along with 30 Republicans in the Senate voting against the bill.
House Speaker John Boehner, an Ohio Democrat, had originally tried to attach an expedited approval of the Keystone XL pipeline project to the bill in December. On Friday, Mr. Boehner was supportive of passing the bill and “preventing a tax increase on hard working Americans,” however he blamed the president for the need to pass such an extension.
“The only reason the provisions at the core of this measure are even necessary is because the president’s economic policies have failed,” said Mr. Boehner in a statement.
U.S. Sen. John McCain voted against passing the bill, because he disagrees with how to fund the bill. Funding of the two percent payroll tax cut has been one of the biggest factors leading to the dispute between members of Congress and the White House.
The reduction in tax revenue by giving taxpayers the two percentage point cut is expected to add $89 billion to the federal deficit over the next 10 years, according to the Congressional Budget Office. Although the majority of working class Americans would obviously want to see lower payroll tax rates during this rough economic period, the loss in tax revenue for the federal government has some members of Congress staunchly opposed to the payroll tax cut.
“Payroll tax extension not paid for & larded w/ outrageous $1.75 billion bailout to broadcasters. Glad to vote against it,” tweeted Mr. McCain shortly after the bill cleared both chambers of Congress.
The president and the majority of congressional Democrats though disagree with Republicans, as they believe that the boost in paychecks for taxpayers would allow more consumer spending which would help the U.S. gross domestic product.
The bill will also require new federal employees to contribute a higher 2.3 percent of their paychecks towards their pension plans, in an effort to offset the cost of the lost tax revenue.
Several Republican and Democratic members of Congress took issue with that provision, but the bill was still passed in order to prevent the restoration of the 6.2 percent social security tax on 160 million American workers.
“Today is a good day. This represents a victory for the middle class in our country,” said House Minority Leader Nancy Pelosi, a California Democrat.
The bill will now be sent to President Obama, who is currently in California attending a series of campaign fundraisers for his re-election campaign.
