The piece of the jobs bill Republicans will pass would end a requirement that the government withhold three percent of the cost of projects contracted out to private companies, to assure tax compliance. It's a rule that Congress adopted during the Bush administration to cut down on tax cheating by government contractors. The near-term stimulative value of repeal is questionable, according to critics, and it's a permanent repeal -- not a holiday. The Joint Committee on Taxation concluded that the requirement saves the federal government over $10 billion over 10 years that would otherwise be lost to major contractors.
The new standard on Capitol Hill, though, is that all legislation other than permanent tax cuts for wealthy people must be paid for -- typically with cuts to federal programs. So Republicans have selected a provision from Obama's deficit reduction recommendations that would limit Medicaid eligibility for people who also receive Social Security benefits.
Here's how it works: The government uses a measure known as Modified Adjusted Gross Income to determine Medicaid eligibility. Currently, though, it only incorporates the taxable portion of Social Security income in that calculation. Under this proposal, it would factor in all Social Security benefits. That means some seniors who currently qualify for Medicaid would no longer be eligible. Doing this would save about $14.6 billion over 10 years -- more than the cost of repealing the 3 percent withholding compliance measure.
In sum: make it easier for big contractors to cheat on their taxes, and covering the cost by limiting Medicaid eligibility for sick old people.
John Boehner's staff explained it on the Speaker's blog Monday afternoon. "Part of Republicans' Plan for America's Job Creators, repealing the withholding tax is also one of several proposals House leaders have highlighted as areas of common ground with the president. Not only is this bill part of the president's jobs plan - it's paid for with a proposal from his deficit plan."
Boehner's spokesman Michael Steel emails, "Assuming they are sincere about doing something on jobs, there is no reason whatsoever for the White House to oppose it. In fact, we hope this bipartisan action, building on the recent passage of free trade agreements, compels the White House to work with us on further jobs legislation. There is common ground to be found between us, but getting more done will require a willing partner in the White House."
So how can Dems say no?