Tentative Deal Reached to Preserve Cut in Payroll Tax

Congressional negotiators reached a tentative deal Tuesday to extend the payroll tax cut and unemployment benefits while avoiding a fee cut for Medicare doctors, according to Republican legislators and aides.

President Barack Obama delivers remarks during an event pushing Congress to extend the payroll tax cut and unemployment insurance through the end of the year, in the Eisenhower Executive Office Building South Court Auditorium, Feb. 14, 2012. The President was joined by Americans who have shared what $40 a paycheck means to them, and who would be affected if Congress doesn't act. Photo: Pete Souza/The White House

Members of a House-Senate committee charged with writing a measure to extend a payroll tax reduction and provide added unemployment benefits reached a tentative agreement Tuesday evening, with Republicans and Democrats claiming a degree of political victory in a fight with significant election-year implications, reports The New York Times.

The deal surrounds a 10-month extension of the payroll tax cut, unemployment insurance and the so-called doc-fix, which keeps payments to physicians participating in Medicare at competitive levels.

According to The Huff Post, under the contours of the deal, as outlined by several sources, the cost of extending all three of until the end of 2012 would be about $50 billion.

The price is that low because lawmakers relented on a previous insistence that the payroll tax cut extension be covered in full — saving them from having to find $100 billion elsewhere.

A vote on the measure would most likely happen by Friday, when Congress is set to recess for a week. But senior aides warned that negotiators still had to sign off formally on the agreement and that obstacles could surface given the long-running tensions over the measure.

However, some conservative House Republicans expressed concerns about the potential agreement and said they were unsure if they would support it. Other GOP House legislators said they expected it to pass with support from a majority of Republicans, as well as Democrats.

According to CNN, some Republicans wanted unemployed individuals to pass drug tests and meet certain education standards before getting benefits — an idea generally opposed by Democrats.

A top Republican aide said the tentative agreement would allow for states to conduct drug testing when the unemployment benefits applicant was seeking a job that required drug testing or lost a job due to a failed drugg test.

The deal also appeared to solidify Speaker John A. Boehner’s shift in leadership strategy, signaled at the end of the last year when he forced a short-term payroll tax extension on his fractious rank and file.

The agreement on Tuesday suggested that he would spend the balance of the year doing what he thought was best for his party and its chances of holding on to the House, and less time fretting over whether the most conservative corner of his members were with him.

“I think they have to work out all the details, but I think the big scope has been agreed to,” House Speaker John Boehner, R-Ohio, told reporters.

House Majority Leader Eric Cantor, R-Virginia, was less enthusiastic, saying “this is not our preferred way” to deal with the issues and adding that details were still being studied.

News of the tentative deal came hours after President Barack Obama publicly urged Congress to extend the payroll tax cut, which is currently set to expire at the end of February. Failure to do so, Obama warned, could derail the economic recovery.

“This is a make-or-break moment for the middle class,” the president said. “The last thing we need is for Washington to stand in the way of America’s comeback.”

“As you guys know, you can’t take anything for granted here in Washington — until my signature is actually on it,” the president said in an appearance in the Eisenhower Executive Office Building next to the White House.

He was apparently referring to last December, when Senate Republicans initially agreed to a two-month payroll extension only to have House Republicans balk.

The president ended up winning that fight after House Republicans buckled under political pressure and an onslaught of calls and e-mails from constituents.

White House Press Secretary Jay Carney later told reporters that the payroll tax cut, extension of unemployment benefits and “doc fix” provision all were “important to the economy in different ways.”

“It is of vital importance that Congress not muck up the recovery that we’re seeing under way,” Carney said of the need for a broad agreement.

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