Congress to vote Friday on payroll tax deal

Reporting from Washington —  With a final deal approved by negotiators, Congress moved toward a Friday vote to extend a payroll tax break and other expiring measures that are among President Obama’s top priorities.

The expected votes in the House and Senate would cap a tumultuous week that produced a deal with prominent detractors on both sides of the political aisle. But as the Feb. 29 deadline neared for the expiration of the tax break, the compromise reflected the desire by Republicans to move on to other battles. GOP leaders sparked the deal by dropping their insistence that the costs be fully offset with spending cuts elsewhere.

“Leaders of both parties have done the right thing for our families and for our economy by reaching an agreement that will prevent a tax hike on 160 million working Americans,” Obama said Thursday evening. “I thank the many Americans who lent their voices to this debate in recent months. You made all the difference.”

House Speaker John A. Boehner gave his blessing to the package, which would extend long-term unemployment benefits and prevent a pay cut for Medicare doctors, even as he portrayed it as a necessary evil to counter Obama’s mishandling of the economy.

“Let’s be honest: This is an economic relief package,” Boehner said Thursday. “The only reason we’re even talking about a payroll tax break or an extension of unemployment benefits is because the president’s economic policies have failed.”

Republican negotiators from the Senate declined to immediately sign off on the deal, leaving the final outcome in doubt as lawmakers were anxious to wrap up the deal before adjourning Friday for the weeklong Presidents Day recess. The package had been negotiated in a midnight session but was not fully resolved until the other negotiators signed off late Thursday afternoon.

Senate Majority Leader Harry Reid (D-Nev.) said his chamber would vote on “this historic piece of legislation” on Friday, once the House approves the measure. Majority Leader Eric Cantor (R-Va.) said the House would vote by noon.

“This should not be a fight,” Reid said, calling the compromise “a perfect example of the common-sense solution we should have had.”

The package would extend the payroll tax break, which has been in place since 2011 and trims 2 percentage points on workers’ contribution to Social Security, for the rest of the year. The general fund would be used to offset the lost revenue to the retirement fund after GOP leaders dropped their insistence that the $100 billion cost be paid for with cuts elsewhere.

That gesture by Boehner and other House leaders broke the stalemate among negotiators, and the other provisions were able to come together.

Long-term unemployment benefits would continue, with changes to reduce the maximum 99 weeks of benefits for the hardest-hit states to 73 weeks. Residents in most states would qualify for no more than 63 weeks of unemployment aid.

The cost of the jobless benefits, about $30 billion, would come partly from a reduction in the government’s contribution to federal employee retirement accounts for new workers – a compromise that led the No. 2 Democrat in the House, Rep. Steny Hoyer of Maryland, to announce his no vote.

“Our deficit problems were not created by these men and women, and they will not be solved by only asking them to contribute,” Hoyer said. “If we are going to address our deficit in a big, bold and balanced way, we must look beyond just federal workers and ask others to share in the contributions our deficit problems demand.”

Several other Virginia and Maryland area lawmakers said they could not support the package because of the cut for federal workers. It reduces the government contribution by 2.3% of pay for those hired after Dec. 31, 2012 – essentially requiring workers to contribute more toward their retirements.

The cost of the unemployment aid would also be covered by auctioning federal communications spectrum, which wireless carriers are eager to scoop up for their growing services.

Republicans won a concession in their efforts to change the unemployment program by allowing states to drug test jobless workers when industries require screenings or if employees were fired for substance abuse. But without funding the program, it is unclear how many states will take up that opening. In most cases, workers who are dismissed for drug use are already ineligible for unemployment benefits. Those receiving unemployment insurance debit cards will no longer be able to use them at casinos, liquor stores and other outlets after reports suggested abuses.

Preventing a pay cut for doctors who provide Medicare services was also in the package. Physicians face a 27.4% reduction without the fix, which will be paid for by cutting health accounts, including a new public health prevention fund that was established under the nation’s new healthcare law.

The votes Friday come after Congress stalemated on the payroll tax cut extension late last year, approving only a temporary measure through the end of February.

But as the fight dragged on, GOP leaders were reluctant to continue pressing for spending cuts as their standing slipped in public polling. Obama and his Democratic allies in Congress portrayed Republicans as blocking a tax break for working Americans.

lmascaro@tribune.com