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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.

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Upper-income seniors have long paid higher Medicare premiums. But the GOP bill would increase those premiums for single retirees earning more than $80,000, rather than the current $85,000. The threshold for married couples would be $160,000 instead of the current $170,000.

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In addition, those thresholds would stop growing to reflect inflation until 1 in 4 Medicare beneficiaries were paying the higher premiums.

Without action, the payroll tax paid by 160 million workers would return to its normal 6.2 percent on Jan. 1, up from 4.2 percent this year. That reduction, enacted in an effort to spur job creation, saved $1,000 this year for a family earning $50,000.

The GOP bill would keep the payroll tax at 4.2 percent through 2012. Obama proposed just a 3.1 percent levy next year and wanted to give similar tax breaks to employers.

The Republican bill would also gradually reduce the maximum 99 weeks of unemployment coverage to 59 weeks by mid-2012, coverage many Democrats consider too short with the current weak economy. Without a renewal, about 2 million jobless people would lose benefits by February.

The marquee dispute, though, appears to be over GOP language that would give the administration two months to issue a permit allowing work on the proposed Keystone XL pipeline, to be built from Canada to Texas.

That pipeline has been fought by environmental groups but favored by labor and business. Obama had delayed a decision on the project until after the November elections.

Obama this week said he would reject the overall bill if it included pipeline language. That threat has galvanized conservative support for the overall measure, with Republicans hoping to use Obama's opposition to portray him as favoring environmentalists over jobs.

Senate Majority Leader Harry Reid, D-Nev., stood by Obama Friday, saying, "If the House sends us their bill with Keystone on it, they are just wasting valuable time because it will not pass the Senate."

Setting the stage for another clash over the environment, the Republican bill would also head off a proposed Environmental Protection Agency rule curbing pollution from industrial incinerators and boilers.

The bill would also:

—Limit where welfare recipients could spend their benefits by preventing ATMs at strip clubs and other establishments from reading the electronic cards through which most people on welfare receive their monthly payments.

—Cut about $21 billion from Obama's health care overhaul by tightening rules for tax credits that will help pay premiums for the uninsured and by squeezing a fund for preventive care —  a strategy Democrats are certain to resist.

—Freeze federal workers' pay in 2013, extending a freeze already planned through 2012, and increase their contributions to their own pensions.

—Require people receiving unemployment benefits to try getting a high school diploma or an equivalent and join programs aimed at helping them get new jobs.

—Raise fees the government-run Fannie Mae and Freddie Mac charge to guarantee mortgages they buy from lenders, and sell portions of the broadcast spectrum.

—Symbolically bar millionaires from collecting food stamps and unemployment benefits, raising a tiny $20 million.

—Let businesses deduct the full cost of their equipment investments in as little as one year.