President Obama is expected to quickly sign legislation to extend the payroll tax cut, unemployment benefits and the “doc fix” on Medicare reimbursements through the end of the year, but unfortunately without an adequate financing plan.
After months of partisan jousting over the extensions – particularly how to finance them -- the bill on Friday passed on votes of 293-132 in the House and 60-36 in the Senate. Under a previous short-term deal, the extensions had been approved only through the end of February.
House Republicans set the stage for extending the policies through December when they indicated last week that they would no longer insist that the Social Security payroll tax cut be offset elsewhere in the budget. The Concord Coalition last week expressed concern about the lack of a more comprehensive financing plan, saying that “political convenience has again trumped the often-voiced desire to put the country’s budget on a more sustainable path.” Other advocates of fiscal responsibility expressed similar worries.
In an issue statement, Concord praised Congress for at least finding $50 billion in offsets for extending unemployment benefits and the doc fix, which once again postponed a sharp scheduled reduction in Medicare payments to doctors. But the $90 billion cost of extending the payroll tax cut could have been covered through budget offsets that would be phased in later, as the economy strengthened.
Instead, that cost is simply being added to the federal debt with a “Let’s worry about it later” attitude. While Social Security benefits are not affected, this additional borrowing underscores the connection between Social Security and the rest of the federal budget.
Concord said this deficit-financing set a worrisome precedent “heading into a year that will see the large tax cuts originally enacted in 2001 and 2003 expire.” Extending those tax cuts without offsets would add an estimated $3.3 trillion to the deficit.