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House Passes Payroll Tax Bill Packed With Poison Pills

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WASHINGTON -- A GOP plan to pay for a payroll tax cut by docking federal workers and cutting Medicare passed the House Tuesday, but appeared headed for quick failure in the Senate as both parties jockeyed for political advantage.

The Republican-controlled House of Representatives voted 234 to 193 for the bill, in spite of a White House promise to veto it and a warning from Senate Majority Leader Harry Reid (D-Nev.) that it would never pass in his chamber.

The plan would pay for the one-year, 2 percent payroll tax cut by means-testing Medicare so that recipients making $85,000 and above have to pay higher premiums -- effectively raising $31 billion. Another $62 billion would come from freezing federal pay for a year and making federal retirees pay more for health care. It would raise yet another $38 billion by hiking fees on banks doing business with Fannie Mae and Freddie Mac.

Besides the controversial methods of paying for the bill, it would also stop clean air regulations estimated to save 20,000 lives, circumvent an environmental review of the Canada-to-Texas Keystone XL oil pipeline, slash emergency unemployment benefits from 73 weeks to 33 weeks, and allow states to force the jobless to prove they're not on drugs in order to get unemployment benefits.

Earlier, Reid called the pipeline provision "ideological candy coating" and said the unemployment reforms were "on the wrong side of ridiculous."

Still, Republican leaders insisted it was a bipartisan plan that should be passed immediately.

"This has been a very balanced package put together by the House, designed to appeal to both Republicans and Democrats," said Senate Minority Leader Mitch McConnell (R-Ky.). "The way it is paid for -- much of it has been recommended by the administration itself in various talks that we've had over the past year."

Democrats have proposed a larger payroll tax cut of 3.1 percent, paid for largely by levying a surtax on income about $1 million. At stake is a break worth about $1,000 to 160 million Americans, or $1,500 if the Democrats' proposal passes. The cut expires Jan. 1 if the sides cannot agree.

Democrats -- and even some Republicans -- feel like they have been winning the message battle over the issue, with Democrats pointing to the lengths Republicans are going to in order to preserve the rich from a tax hike.

If Congress can't strike some kind of deal before the end of the month, 1.8 million long-term jobless will miss expected benefits in January, according to the National Employment Law Project, a worker advocacy nonprofit. Congressional Democrats want to preserve the current regimen of extended federal benefits, which provide compensation for up to 73 weeks for laid-off workers who use up 26 weeks of state benefits. The White House has signaled it would be willing to forgo 20 weeks of federal assistance. But Republicans want to cut the federal portion by 40 weeks to 33 weeks max, and its bill gives states the option of trimming benefits further. It also lets states require the jobless to pass a drug test to be eligible for unemployment compensation.

Rep. Sander Levin (D-Mich.), the top Democrat on the committee that oversees unemployment insurance, said Tuesday that 3.3 million jobless would miss weeks of checks next year under the GOP bill.

Both Republicans and Democrats have insisted they will extend unemployment benefits and the payroll tax cut, but with agreement on only one part of the method for funding the tax cut -- raising fees on Fannie and Freddie -- it was unclear Tuesday how they would proceed.

A Democratic source said Reid approached McConnell earlier Tuesday and offered to bring the GOP measure up for a vote immediately. Such a move requires unanimous consent in the Senate, but McConnell declined.

“We need to begin real negotiations on how to prevent a $1,000 tax hike on American families," Reid said after the House voted. "The sooner we get this vote over with, the sooner those negotiations can begin in earnest. I will speak with Sen. McConnell again tomorrow to determine how soon we can hold this vote."

Dozens of jobless have told HuffPost they're anxiously watching Congress for a reauthorization of federal benefits.

Susan Lundberg of Palm Springs, Calif., said she lost her waitress job one year ago. Now she's worried that her unemployment benefits will run out before she finds a job. She said she'd worked at the same restaurant for longer than a decade. She has felt that her age, 60, has been a major obstacle to finding new work, and that she'll be "screwed" if her benefits stop before she finds employment.

"I was happy at my job and am sorry they closed," Lundberg said in an email. "Due to things beyond my control I am now in this situation. Congress should assume at least some accountability for the current situation that they have put people in."

Having used up her 26 weeks of state benefits halfway through this year, Lundberg recently advanced to the second "tier" of federal Emergency Unemployment Compensation, which offers up to 14 weeks of checks.

It's unclear how Lundberg would be affected under the Republican plan, which would eliminate the second and fourth tiers of EUC and phase out the 20-week Extended Benefits program halfway through next year. The third tier of EUC, which Republicans would save, offers up to 13 weeks of benefits.

Lundberg said she did not like the way things like unemployment insurance and the payroll tax cut got rolled up in a bill with the Keystone pipeline.

"If they really thought it was a serious issue they wouldn't put in all this other stuff," she said. "They should vote on it separately. It just makes things not happen when you put all these things in the bundle."

As for drug testing, Lundberg said: "I think they should drug test Congress. They've been acting a little weird."

Nine Poison Pills In The GOP Payroll Tax Extension Bill:

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