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Congress Close To Extending Payroll Tax Break

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Congress Close To Extending Payroll Tax Break

Politics

Congress Close To Extending Payroll Tax Break

Congress Close To Extending Payroll Tax Break

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Congressional Republicans have backed away from a showdown with President Obama over a popular payroll tax holiday.

MELISSA BLOCK, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel.

On Capitol Hill, a very unpopular Congress is racing to close the deal on extending some very popular and soon-to-expire provisions. It all came together after House Republican leaders earlier this week dropped their insistence that a renewed payroll tax cut be paid for with cuts elsewhere.

BLOCK: That also made it easier to find ways to pay for extending unemployment benefits and preventing big cuts to Medicare providers.

As NPR's David Welna reports, lawmakers hope to approve a deal before their week-long President's Day recess.

DAVID WELNA, BYLINE: Both Democrats and Republicans in Congress say a legislative train wreck has likely been averted. A deal they say is now on track to extend the payroll tax cut, unemployment insurance and the fix for Medicare fees through the end of this year. Senator Jon Kyl is an Arizona Republican on the committee hammering out that deal.

SENATOR JON KYL: My understanding is, at this point, it's a matter of staff trying to work out the details of how it's actually written.

WELNA: One point that is clear is that extending a 2-percentage-point cut in employee's Social Security withholdings will mean 160 million taxpayers will, on average, keep $20 more of their paychecks each week. That payroll tax cut was due to expire at the end of the month. And today, House Speaker John Boehner, for the first time, defended in public his decision to simply let the $100 billion cost of that tax cut add to the budget deficit.

REPRESENTATIVE JOHN BOEHNER: We were not going to allow the Democrats to continue to play political games and raise taxes on working Americans.

WELNA: But Democrats say Republicans realized they were playing a losing hand. Maryland Senator Ben Cardin is also on the committee set up to strike a deal to extend the expiring provisions.

SENATOR BEN CARDIN: Philosophically, they haven't supported these issues in the past. So, you have to believe there's an agenda here that they recognize the politics of it.

WELNA: Under the deal, the maximum unemployment benefit will be reduced from 99 weeks to 73 weeks. Its $30 billion cost would be offset with bigger contributions to pension funds by federal employees and deep cuts to a new health care program promoting healthy living and fighting obesity. The $20 billion price tag for preventing cuts in Medicare payments would be partially offset by cuts to payments to hospitals that fail to collect Medicare and Medicaid co-pays from patients.

But the shortfall for Social Security caused by the payroll tax cut would have to be compensated by general funds from the Treasury. That angers conservative Republicans, such as Kentucky Senator Rand Paul.

SENATOR RAND PAUL: This is a disaster. This is probably the worst day in the history of Social Security since 1935 when it started.

WELNA: But the more widespread sentiment in Congress is relief that a deal's being struck.

David Welna, NPR News, the Capitol.

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