Congress gave final approval to payroll tax cut legislation Friday, also maintaining Medicare reimbursement rates for doctors and long-term unemployment benefits.
After the vote, Sen. Patty Murray (D-Wash.) said, "I am disappointed that it took this long for Republicans to agree to a full-year extension, but I am glad that we were finally able to get this done for the middle-class families and seniors who were counting on it.”
In December, a short-term extension of the payroll tax cut was passed, but the new bill faced opposition from House Republicans, who were demanding spending cuts to the pay for the measure. This week, House Speaker John Boehner said he was willing to compromise, which paved the way for the bill to move forward.
The package agreed on by House and Senate negotiators extends the 2-percentage-point payroll tax cut until the end of the year. It also extends long-term unemployment benefits but reduces the maximum number of weeks insurance can be claimed.
If the extension were to have lapsed, Republicans faced the awkward prospect of raising taxes on large numbers of Americans in an election year. Expressing support for the bill, Rep. Dave Camp (R-Mich.), noted that it "includes no more job-killing tax hikes to pay for government spending."
On Thursday night, Republican negotiators had not signaled final approval of the bill, leaving its passage in doubt. Senate Majority Leader Harry Reid (D-Nev.) urged Senate Republicans to support the bill Friday morning.
In debate before the House vote, Minority Leader Nancy Pelosi (D-Calif.) praised the work of her colleagues.
"This represents a victory to have a payroll tax cut for the middle class. It’s important for those families because it puts $40 more into a paycheck," she said. "It has a macro-economic effect because those families will spend that money and put it into the economy. That is a job creator."
In part, the tax cut will be funded by reducing government contributions for new federal employees’ pension pots. Despite broad agreement on the package, some Democrats with large numbers of government workers in their districts said they were voting against the bill because of those reductions.