Congress Passes Payroll Tax Cut and Unemployment Benefits Extension


Congress passed legislation extending the payroll tax cut, unemployment benefits, and the “doc fix” for Medicare physician reimbursements through the remainder of the year.

The House approved the measure by a vote of 239-132, while the Senate quickly passed the legislation by a 60-36 vote, ahead of a congressional recess that starts this weekend. President Obama is expected to sign it into law before the current two-month extension expires at the end of this month.

The bill, known as the Middle Class Tax Relief & Job Creation Act, extends the 2 percentage point cut in Social Security and Medicare withholding taxes to 4.2 percent. It also extends unemployment benefits through the rest of the year, although the 99-week maximum benefit in some states will be gradually scaled back to 73 weeks

Democratic and Republican negotiators in a congressional conference committee agreed this week to pay for the extension in part through auctions of wireless spectrum, a 2.3 percent increase in pension contributions by new government employees, and health care offsets that fix technical errors and reduce spending on providers and corporations to ensure Medicare patients continue to have access to their doctors.

The agreement includes some reforms to the unemployment insurance program pushed for by Republicans, allowing states to promote the re-employment of unemployed workers through demonstration projects, and to require drug tests, but only for people who were fired for unlawful use of controlled substances. It also creates a national job search standard, covering benefits from beginning to end, and requires the unemployed to look for a job if they receive unemployment benefits, while expanding work-sharing programs to help avoid layoffs in the first place.

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