Work Continues on Payroll Tax Cut, Jobless Benefits

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A congressional conference committee resumes work today on legislation to extend unemployment benefits and a temporary cut in the payroll tax that provides funding for Social Security. Partisan differences – particularly on paying for the extensions — led Congress late last year to only approve short-term measures that expire at the end of this month.

The new legislation could also postpone a sharp cut that is scheduled in Medicare payments to doctors – something Congress has frequently done in the past rather than approve a realistic structural reform of the payment system.

The Treasury is replacing the lost revenue from the payroll tax holiday, essentially increasing the federal deficit to help pay current Social Security benefits. While this is designed to provide short-term support for the economic recovery, it underscores the often-denied link between Social Security and the rest of the federal budget.

A conference committee meeting last week largely avoided the difficult question of paying for the extensions as lawmakers focused on other issues, including regulations on industrial boilers. Democrats and Republicans traded complaints about unnecessary diversions from the key issues that need to be addressed by the end of the month.

The conference committee could hold as many as three public sessions this week. Congressional leaders in both parties have, in partisan terms, expressed impatience with the committee’s work.

On Friday Senate Majority Leader Harry Reid of Nevada said Democratic leaders had started drafting their own version of a package to extend the payroll tax, unemployment benefits and the doc fix. He warned that he would bring this measure to the floor if the conference committee fails to reach agreement soon.

On Monday House Speaker John Boehner and Majority Leader Eric Cantor issued a statement lamenting the “lack of progress” by the committee, calling on it to “immediately focus on some of the spending cuts that are in the House-passed bill.”

External links:
Speaker Boehner and House Majority Leader Cantor on Payroll Tax Cut Extension (Press Release)
Senate Majority Leader Harry Reid on Payroll Tax Cut Extension (Press Release)

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