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Harry Reid (Getty Images/Photo by Will McNamee)

Cease-fire?

Congress | Payroll tax cut deal could be the last significant legislative battle until after Election Day

WASHINGTON-Seeking to avoid an election year political fight, Congress Friday passed a payroll tax cut extension with bipartisan majorities in both the House and Senate.

The large support in favor of the extension package stands in sharp contrast to the controversy that erupted in December when conservative Republicans, particularly in the House, balked at supporting a two-month version of the extension.

But that December defiance melted under intense pressure from a coalition of Senate Republicans, GOP presidential hopefuls, and the organization Americans for Tax Reform. The sticking point then was a demand by fiscal conservatives that equal spending cuts should offset the tax cut extension price tag.

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But seeking to avoid such controversy with the 2012 election heating up, GOP leaders this time insisted that members of the Republican rank-and-file drop their demand that budget cuts be included with the payroll tax cut extension. Most congressional Republicans agreed that this was not the time for another fight: the extension measure passed the House with an overwhelming 293-132 vote with the Senate voting 60-36 to approve.

The package carries a cost of $143 billion and averts a tax hike for 160 million Americans, which would have amounted to about $80 in monthly salary for the average worker. The legislation also prevents the expiration of jobless benefits, averaging about $300 a week, and delays a pay cut for doctors who treat Medicare patients.

After Friday's vote, members of both parties appeared eager to tout the result as a breakthrough in bipartisan cooperation.

"We're dumb, but we're not stupid," Sen. John McCain, R-Ariz., told reporters. "We did not want to repeat the debacle of last December. It's not that complicated."

Senate Majority Leader Harry Reid, D-Nev., added, "Everything doesn't have to be a fight."

But not all lawmakers agreed. In the House, 91 Republicans and 41 Democrats voted against the package. In the Senate, 30 Republicans, five Democrats, and independent Sen. Bernie Sanders of Vermont opposed it.

Conservatives who voted no pointed to a new Congressional Budget Office estimate showing that the payroll tax cut package will add $167.5 billion to the deficit over the next three years. As scheduled offsets kick in over the next decade, the package's increase to the deficit will be reduced to $89.3 billion.

"I am looking beyond this election cycle," said Rep. Allen West, R-Fla., who opposed the package. "I am looking at the ramifications of adding billions of American taxpayers' dollars to a trillion-dollar deficit with no answers as to how or when we will pay for this bill. I am looking beyond immediate gratification and instead looking at an American political system willing to cave to political pressure to give Americans a temporary Band-Aid that in the long run only makes things worse for their future."

Part of the package will be paid for by selling the broadcast spectrum to wireless companies and an increase in pension contributions from federal employees. These new revenues will bring in $50 billion.

Rep. Jim Jordan of Ohio, the Republican Study Committee chairman, also voted against the deal, saying it "falls short of what Americans deserve and does not address the wounds of debt, overregulation, and rising energy prices that threaten our economy."

But some conservatives did tout a few favorable elements in the package. For example, it cuts about $5 billion from a health prevention fund created by Obamacare. Conservatives called that cut the largest decrease in the president's healthcare plan to date.

After 2011 was marked by fierce fiscal battles, the payroll tax cut deal could signal an early end to significant congressional action on federal spending between now and November. Lawmakers passed the package just before starting a congressional recess and will not return to Washington until later this month, with members of both parties indicating that they are reluctant to pick any more political fights on Capitol Hill until after Election Day.

With quiet months likely ahead for Congress, that sets up the possibility of a legislative logjam in December. This latest payroll tax cut extension is set to expire at the end of 2012. Lawmakers in the lame duck session at the end of this year also will face action on another vote to increase the debt ceiling, on finalizing the $1.2 trillion spending cuts mandated by the failure of last year's supercommittee on deficit reduction, and on the expiration of the Bush-era tax rates.

Edward Lee Pitts
Edward Lee Pitts

Lee is WORLD's Washington Bureau chief. As a reporter for the Chattanooga Times Free Press, he was embedded with a National Guard unit in Iraq. He also once worked in the press office of Sen. Lamar Alexander.

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