- Agreement Reached on Payroll Tax Extension
- February 20, 2012 | Author: B. Jeffrey Brooks
- Law Firm: Adams and Reese LLP - Washington Office
A bipartisan agreement was reached on the payroll tax extension. Negotiations lasted until late Wednesday evening, with several members of the House-Senate conference committee objecting to some of the preliminary language. However, it remains to be seen if there will be a Friday vote on the conference report; according to House rules, the legislation needed to be made public before midnight on Wednesday. Conference leaders had hoped for a Friday vote, prior to next week’s recess.
The conference agreement extends the payroll tax cut through the remainder of 2012, reforms the unemployment insurance program, and averts a 27% cut in reimbursement rate for doctors under Medicare. Unemployment insurance benefits were a major point of contention in the negotiations. In the end, a tiered approach was adopted:
- In states where unemployment is over 9%, benefits will be available for 99 weeks at the beginning of the year. However, benefits will decline to 73 weeks by the end of the year.
- In most states, unemployment insurance benefits will be limited to 63 weeks.
The cost of the legislation would be roughly $150 billion, over ten years. However, $50 billion would be offset through spending cuts and revenue increases. Approximately $15 billion would be raised by auctioning portions of the electromagnetic spectrum, while more than $20 billion would be derived from healthcare savings.