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VOL. 126 | NO. 241 | Monday, December 12, 2011

House GOP Introduces Bill Renewing Payroll Tax Cut

ALAN FRAM | Associated Press

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WASHINGTON (AP) – House Republicans introduced legislation Friday that would extend the Social Security payroll tax cut through 2012 and trim extra benefits for the long-term unemployed.

The measure invites a year-end clash with President Barack Obama and Democrats by including language that would pave the way for construction of a controversial oil pipeline.

The legislation, which also seeks to head off an automatic cut in Medicare reimbursements to doctors, is less generous than a version that Obama and congressional Democrats have championed. The GOP measure's cost, which exceeds $180 billion, would be fully paid for by freezing federal workforce salaries, requiring higher earning elderly people to pay more for Medicare and raising some federal fees. But it ignores the higher taxes on the rich that Democrats would use to cover the costs of their proposal.

New details of the GOP measure revealed Friday include provisions that would let states require some applicants for unemployment benefits to take drug tests, prevent welfare recipients from spending their benefits in strip clubs, liquor stores and casinos, and require illegal immigrants and others to submit their children's Social Security numbers before they could receive refunds under the children's tax credit.

The Republican measure would keep the payroll tax that about 160 million American workers pay at 4.2 percent in 2012, the same as it has been this year. It is normally 6.2 percent. Obama proposed trimming the levy to 3.1 percent and giving reductions to employers as well.

Without congressional action, the tax would revert to 6.2 percent on Jan. 1. With next November's presidential and congressional elections looming, both sides have been accusing each other of delays that would result in tax increases for workers.

House GOP leaders plan a vote on the measure next week.

"If the president is serious about his commitment to get the economy going and help small businesses create jobs in this country, he'll work with us and sign this bill," House Majority Leader Eric Cantor, R-Va., said in a written statement.

Even before the bill's full details were known, Senate Majority Leader Harry Reid pronounced it dead on arrival in the Senate.

The Nevada Democrat focused his objections on language that would give the Obama administration two months to issue a permit allowing work on the proposed Keystone XL oil pipeline, which would run from Canada to Texas. The pipeline is opposed by environmental groups but favored by business and some unions, and Obama has threatened to kill the bill if opens the door for the pipeline to be built.

"With the middle class facing a huge tax increase on the first of January, now is not the time to be debating unrelated measures like an oil pipeline," Reid said in a written statement. "If the House sends us their bill with Keystone on it, they are just wasting valuable time because it will not pass the Senate."

The bill would gradually reduce the current 99 week maximum unemployment coverage for the long-term unemployed to 59 weeks by mid-2012.

Doctors who serve Medicare patients are currently scheduled to automatically receive a 27 percent cut in the reimbursements they receive from the government. The bill would replace that cut with 1 percent increases for 2012 and 2013. That would give Congress time to come up with a totally new system for paying doctors under Medicare.

The $39 billion cost of that change would be mainly paid for by increasing Medicare premiums for upper income retirees, along with some cuts in spending authorized by Obama's health care overhaul. It's unclear if Democrats will accept those.

The GOP plan also heads off Medicare cuts that would affect rehabilitation medicine and rural ambulance services.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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