President Barack Obama Finally Wins Payroll Tax Cut

The $143 billion payroll tax cut won by President Barack Obama may be the last significant measure he receives from a deeply divided Congress that promises to only get more polarized as Election Day approaches.

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

Under the bill Congress approved Friday, workers would continue to receive a 2 percentage point increase in their paychecks, and people out of work for more than six months would keep jobless benefits averaging about $300 a week, steps that Obama says will help support a fragile recovery from the worst economic downturn since the Great Depression.

Obama’s coveted renewal of the payroll tax cut for 160 million workers and jobless benefits for millions more caps a five-month campaign-style drive against reluctant Republicans, reports The Huff Post.

The agreement reached in Congress yesterday is an important step that will prevent a tax hike on 160 million hardworking Americans who are still recovering from the worst economic downturn since the Great Depression, and continue essential support for millions of unemployed Americans struggling to find jobs, according to The White House Blog.

The agreement is also important because it prevents doctors who treat Medicare patients from taking a nearly 30 percent pay cut.  That kind of cut would harm physicians and jeopardize seniors’ access to the doctor they know and trust.

It would also head off a steep cut in reimbursements for physicians who treat Medicare patients.

Right now, Medicare pays hospitals and other providers for most of the bad debt that results when beneficiaries do not pay what they owe.The Administration first proposed modestly reducing the amount Medicare will pay for bad debt in our recommendations to the Joint Select Committee on Deficit Reduction in September.

The National Commission on Fiscal Responsibility and Reform (Bowles-Simpson Commission) also recommended reducing these payments. And the final agreement includes an even more modest reduction than the Administration’s proposal.

The tax cuts, jobless coverage and higher doctors’ payments would all continue through 2012.

The reduction in the Social Security payroll tax, which is deducted from workers’ paychecks, would cost $93 billion through 2022.

In a sudden concession this week that made bipartisan agreement possible, House Republicans dropped their demand that the tax cut be paid for with spending reductions.

Some have argued that this legislation hurts the Affordable Care Act. This claim is false. Most of the policies in this bill that help prevent doctors from taking a pay cut are in the President’s budget.  Others were the product of a tough negotiation.

And none harm the implementation of health insurance premium tax credits as did the House Republican plan from December.

Republicans said the final deal, significantly changed from a tea party-backed measure that passed in December, was the best Republicans could get.

“We’re dumb, but we’re not stupid,” Sen. John McCain, R-Ariz., told reporters after he voted. “We did not want to repeat the debacle of last December. It’s not that complicated.”

“We don’t control Washington. Democrats still control Washington – they control the Senate, and they control the White House,” said Rep. Dave Camp, R-Mich., the top House negotiator on the measure. “A divided government must still govern.”

All in all, this agreement ensures that physicians receive reliable payments for the care they provide and that Medicare beneficiaries have access to care – and does so in a fiscally responsible way.

And, the agreement reached prevents a tax increase from hitting millions of working Americans and prevents the end of support for millions looking for a job.

Together, these provisions also help our economic recovery, and we hope they are just the first step in the many we will take to boost job creation and construct an economy built to last.

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