House Passes Payroll Tax Cut Compromise

By a comfortable margin, the House of Representatives on Friday passed legislation to extend a two percent payroll tax cut through the end of the year.

The final vote was 293-132, with 91 Republicans and 41 Democrats bucking their party leaders to vote against the package. Five Republicans and four Democrats did not vote.

The bill reflects an agreement between GOP and Democratic leaders in the House and Senate. It also extends emergency unemployment insurance though December, though it reduces the number of weeks in which people looking for work can draw on benefits. And it means that Medicare physicians won’t experience a steep pay cut by extending their reimbursement rates for at least 10 months.In a significant victory for Democrats, Republicans were forced to relent on their demand that the payroll tax portion of the package be offset with spending cuts to middle-class programs and benefits elsewhere in the budget. But the bill still includes tens of billions of dollars in cuts over 10 years to health care programs and to federal employee pay — measures which provoked backlash from some of the most senior Democrats in the House.

The Senate is expected to take up the agreement later Friday. Though aides expect it to pass, they also predict significant Republican opposition, reflecting the GOP’s underlying opposition to the payroll tax cut as policy, and the fact that the party’s negotiators were frozen out — or claim they were frozen out — of the discussions. To accommodate those objections, Senate leaders agreed in a last-minute development that the conference report would be immunized from a filibuster — meaning it can pass with a simple majority.

That decreases the burden on leaders of both parties to round up votes for the package. And though Republicans object more strongly, it isn’t a burden-free whip operation for Democrats either. Both progressive and conservative Dems dislike the package for different reasons. Some conservative Dems oppose it because the payroll tax cut portion is not offset. Progressives oppose the budget cuts in the package, and are wary of tweaking the payroll tax, which provides a dedicated funding stream to Social Security, at all. The bill, it should be noted, does replenish the Social Security trust fund with general tax revenue.