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Week Ending December 23, 2011

Congressional Stalemate: House GOP Scuttles Deal for Year-End Unemployment Insurance and Payroll Tax Cut Extensions

As of this writing, most of Congress has left Washington, D.C. without passing legislation that would have extended federal unemployment insurance benefits and continued the 2011 payroll tax cut for two months. On Saturday, the Senate passed the Middle Class Tax Relief and Job Creation Act of 2011 (H.R. 3630) with an overwhelmingly bipartisan vote of 89-10, including 39 Republicans, and with at least tacit support from House Speaker John Boehner (R-OH). Within 24 hours, Speaker Boehner renounced the Senate bill to mollify the radical tea-party elements in his party. On Tuesday, the House rejected the Senate compromise legislation in a partisan vote of 229-193, with no Democrats and seven Republicans voting in favor.

The House bill instead calls for the establishment of a House-Senate conference committee to reach agreement on a year-long bill before the end of the year. However, it will take more than a few days to resolve deep disagreements about how to pay for these extensions. The President and congressional Democrats support a surtax on millionaires and billionaires, while congressional Republicans have proposed slashing the number of weeks of unemployment benefits available to the long-term unemployed and other changes to the nation’s unemployment law that would destabilize the system, as well as freezing federal employees’ pay for the third year in a row.

The consequences of the House GOP’s recalcitrance will be harsh. Immediately in January, 1.8 million unemployed Americans will lose their unemployment insurance benefits and by the end of February, 2.8 million will be cut off. In their first paycheck of the New Year, 160 million working Americans will lose $40 in take-home pay due to the House’s failure to extend the payroll tax cut. Additionally, reimbursements to doctors for treating Medicare patients will be slashed by 27%, resulting in fewer available doctors for seniors and persons with disabilities. And, federal funding will expire for the Temporary Assistance for Needy Families program, child care subsidies for low-income working parents, transitional Medicaid for those moving from welfare to work, and Medicaid subsidies to help low-income seniors on Medicare pay for doctor visits. The Senate bill containing a two-month extension for all of these programs would give the Senate and House the time they need to reach a longer-term agreement.

Senate Majority Leader Harry Reid (D-NV) has called on the House to return to the U. S. Capitol and pass the bipartisan Senate bill, thus avoiding these automatic actions that will occur in less than two weeks unless Congress acts. So far, we have no indication that House Speaker Boehner will break with the extreme wing of his party and hold a vote on the Senate bill to prevent this draconian outcome. If Congress fails to act in 2011, we expect the first order of business in 2012 will be to attempt to undo at least some of the damage caused by this end-of-the-year fiasco.

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