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Payroll tax: House GOP offers new plan

Payroll tax plan from House Republicans would extend Social Security payroll tax and unemployment benefits, although trimmed from current levels.

By Alan Fram and Ricardo Alonso-ZaldivarAssociated Press / December 10, 2011

In this photo taken earlier this month, House Speaker John Boehner of Ohio leaves his news conference on Capitol Hill in Washington. On Friday, House Republicans offered a new proposal that would extend the payroll tax and extend in trimmed form unemployment benefits.

Susan Walsh/AP/File

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WASHINGTON

House Republicans unveiled a bill Friday renewing the Social Security payroll tax cut and extending but trimming unemployment benefits but barreled toward a showdown with President Barack Obama by including language jumpstarting work on a controversial oil pipeline.

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With Democrats claiming the measure is too stingy toward jobless and lower-income people, next week's House vote looms as the opening scuffle in a year-end battle that will let each party spotlight its economic priorities ahead of November's presidential and congressional elections.

The two parties generally agree on the bill's pillars: preventing the Jan. 1 expiration of payroll tax cuts and of extra coverage for the long-term unemployed, and avoiding a mandated cut in payments the government sends doctors for treating Medicare patients.

But the GOP tax cut and jobless benefits are less generous than Democrats want. And Republicans ignore the White House's preference to finance the bill by boosting taxes on millionaires, instead paying their bill's price tag — more than $180 billion — by extracting money from federal workers, boosting federal fees and requiring higher-earning seniors to pay more for Medicare.

"This package does not include everything Republicans would like, nor does it have all that Democrats have called for," said House Speaker John Boehner, R-Ohio. "But it is a win for the American people and worthy of the president's signature." 

White House spokesman Jay Carney derided the GOP package, saying, "Their plan seeks to put the burden on working families while giving a free pass to the wealthiest and big corporations by protecting their loopholes and subsidies."

Some GOP proposals — for example, charging some seniors more for Medicare, freezing civil servants' pay and raising some federal fees — are similar to past proposals by Obama.

While the measure's chief ingredients had been clear for days, the 369-page legislation revealed new details. These included letting states administer drug tests to some unemployment benefit applicants; barring welfare recipients from using their benefits at strip clubs, liquor stores and casinos; and cracking down on illegal immigrants collecting federal checks for the children's tax credit by requiring them and others to first produce Social Security numbers.

The GOP plan also staves off a threatened Medicare cut that would slash fees paid to doctors by 27 percent, which no one wants since it would destabilize health care for 47 million seniors and disabled people. The price would be paid by higher-earning seniors, who would pay higher monthly premiums for Medicare outpatient services and prescriptions starting in 2017.

Currently only about 7 percent of Medicare recipients pay higher premiums because of their income. Under the proposal, 25 percent would eventually pay higher monthly charges.

That would affect not only the wealthy but many retirees who consider themselves solidly middle class. Advocates for the elderly were quick to object, but Republicans said their idea is a virtual clone of an earlier plan by Obama.