Lawmakers Strike Tentative Deal On Payroll Tax Package

Top Democratic and Republican negotiators have struck a broad tentative agreement to extend the payroll tax cut, unemployment insurance and Medicare physician payment rates through the end of the year, aides from both sides who are familiar with the deal tell TPM. Some of the details have yet to be ironed out, but Congress appears to have had a critical breakthrough in negotiations to prevent the three provisions from lapsing.

The payroll tax cut will be extended through 2012 without an offset, at a cost of $185 billion. House Republicans paved the way for it this week by dropping their demand that continuation of the tax holiday be matched with equal spending cuts elsewhere.The Medicare Sustainable Growth Rate — the so-called “doc fix” — will be patched at some $25 billion, paid for in part with cuts to Medicare providers that both sides agree on, a Senate Democratic aide said.

Health care insiders tell TPM the offsets will include Medicare payment cuts for home health services, hospital bad debt, and reductions in existing pay bumps for hospitals that have many low-income patients. The sources said the Affordable Care Act’s prevention fund will also be cut to offset SGR, a savings policy President Obama proposed in his September budget that faced some Democratic pushback.

Unemployment compensation is set to be extended at a 75-week maximum, the Democratic aide said. A top GOP aide disputed that claim, saying it’s more complicated and has different “tiers.” The $25-$30 billion cost is offset with a half-spectrum auction of wireless bandwidth and cuts to federal employee government pensions. The Dem aide said there will be no GED requirement or expansion of the child credit attached to the unemployment insurance extension.

Aides from both parties agreed that the compromise involves language about drug testing connected to unemployment insurance. But a Democratic aide argued that the actual policy won’t be any different, saying Republicans unsuccessfully pushed for stronger language.

“No change to current policy,” the Democratic aide told TPM. “We gave them restatement of current policy as fig leaf; they are desperate.”

This isn’t yet a done deal. Some of the specifics have yet to be hashed out, and coding all this into legislation could produce further disputes. But it appears that the broad disputes have been resolved; barring an epic collapse, Congress looks poised to resolve a series of battles that seemed fated for stalemate not long ago.