Yesterday, the House passed (234Y-193N) a bill (H.R. 3630) extending the payroll tax holiday, continuing unemployment insurance, and fixing the Medicare doctor reimbursement rate. The bill received 224 Republican votes and was supported by 10 Democrats. Only 14 Republicans voted no.
Under the bill, the payroll tax extension would maintain the temporary payroll tax rate of 4.2 percent through December 31. 2012. Unemployment Insurance benefits for long-term unemployed would be extended, although for a shorter period of time. The so-called “doc fix” provision would prevent a 27 percent reduction in Medicare reimbursements to doctors.
These three issues enjoy broad bipartisan support in Congress. However, final agreement has been stymied over how to pay for the increased costs. The President and Senate Democrats would offset the costs by levying a surtax on annual incomes over $1 million: House Republicans would reduce federal spending.
The House bill pays for the increased costs (close to $200 billion) by extending the federal civilian pay freeze until Dec 31, 2013, increasing the federal employee retirement contributions, and increasing some Medicare premiums.
Under the bill, Civil Service Retirement System (CSRS) employee contributions would increase from 7 percent to 9.5 percent and Federal Employment Retirement System (FERS) employee contribution would go from .8 percent to 2.3 percent. Both increases would occur over three years beginning in 2013. The bill also would increase Medicare Part B and D premiums for high-income beneficiaries (currently $85,000 for individuals and $170,000 for couples) beginning in 2017.
The House also includes language that would accelerate the decision process for the Keystone XL oil sands pipeline that would go from Canada to the Gulf coast. The president strongly opposes including this provision to force a decision on the pipeline before an ongoing study is completed. Republicans argue that quick action on the pipeline would create jobs.
Prospects for final approval of H.R. 3630 are dim. The White House immediately threatened a presidential veto should Congress pass the House bill. And, there is little doubt that the Democrat-controlled Senate, which has already rejected a similar proposal, will reject the House bill.
Nevertheless, It is still likely that Congress and the president will agree on a way to extend the payroll tax, extend unemployment benefits, and fix Medicare doctor reimbursements before December 31. But, with less than three weeks to go, the way to that agreement is still unclear.