Bipartisan deal on payroll tax holiday/UI benefits extension

Posted by AzBlueMeanie:

Tea-Publicans are opposed to the payroll tax holiday middle-class tax cut, and they are really opposed to any extension of unemployment insurance benefits for the unemployed. It does not benefit their clients, the one percent. We finally found a tax break that Tea-Publicans do not like.

President Obama asked Congress to send him a clean tax bill. Tea-Publicans, of course, immediately attached right-wing riders to the bill. The middle-class tax cuts were originally included in the Omnibus Budget bill, but the two were later bifurcated. The right-wing riders attached to the Omnibus Budget were turned aside (as indicated in the previous post).

Tea-Publicans settled on one hostage demand for the middle-class tax cuts bill: the Keystone XL pipeline. In a "bipartisan" agreement that only those living in the rarefied air of the Senate bubble could love, a "compromise" was reached on Friday night: the payroll tax holiday and unemployment insurance benefits are extended for 60 days, and the president must make a decision on the Keystone XL pipeline in 60 days. Senate reaches agreement to extend payroll tax cut for two months – The Washington Post:

Under the separate Senate agreement on the payroll tax, the rate paid by 160 million workers would remain at 4.2 percent through February, rather than reverting to 6.2 percent on Jan. 1.

In addition, benefits for the long-term unemployed would be extended for two months, and scheduled cuts to Medicare re­imbursement rates for doctors would be postponed.

Greg Sargent reports on the negotiations at The Plum Line:

A Senate Dem aide emails:

Senate leaders have reached an agreement on a two-month deal to extend the payroll tax cut and unemployment insurance.

Democratic negotiators offered a fully-paid for, one-year continuation of the middle class payroll tax cut and unemployment insurance, but Republicans rejected it, insisting on cutting Medicare benefits and refighting old battles on health care reform as part of any one-year deal. Republican negotiators wanted to raise premiums on Medicare beneficiaries and charge middle class families more for their health care.

If Republicans are going to make cutting Medicare benefits the price of extending a middle class tax cut for one year, we’ll take the two month extension and gladly have this fight for American families again in February.

Back to the Post reporting:

A two-month package would cost $40 billion. Senators would pay for it with items identified by both sides during this year’s deficit-reduction talks, including higher fees on lenders Fannie Mae and Freddie Mac.

Under the agreement, Congress would approve language requiring that a construction permit be issued for the 1,700-mile Keystone XL pipeline within 60 days unless the president determined the pipeline was not in the national interest.

“The House of Representatives has been quite clear that they’re not going to support a package that does not include the pipeline,” McConnell said on the floor Friday.

“Frankly,” he added, “I will not be able to support a package that doesn’t include the pipeline.”

So did the the Tea-Publicans actually get anything in this deal? It doesn't appear so. The State Department announced last month that a decision on the project would be delayed until early 2013. "The State Department indicated this week that it could not complete the necessary reviews in 60 days and, if forced to do so, would reject the project."

So the Tea-Publican hostage taking will likely result in no permit being issued for the pipeline. (David Dayen at Firedog Lake knocks down the seemingly widespread assumption that Obama would be taking a grave political risk in nixing the pipeline. Republicans demand to kill the Keystone XL Pipeline).

The extension of the tax cut let the White House declare victory on Obama’s signature year-end legislative initiative. Allowing the one-year tax holiday to expire would have meant a tax increase of $1,000 next year for a family making around $50,000 a year.

The payroll tax had been the centerpiece of Obama’s jobs program. It was intended to ensure workers could keep more of their salaries in the down economy.

Obama said that Congress should not leave for the holidays without extending the tax cut. Tea-Publicans got a pyrrhic victory and Democrats got a middle-class tax cut, albeit for 60 days. Democrats live to fight another day for middle-class tax cuts, while the Keystone XL pipeline has for all intensive purposes been killed by Tea-Publican hubris. Tea-Publicans will have to search for another hostage in February.

UPDATE: From Think Progress:

However, studies conducted independently of TransCanada find much smaller jobs numbers, far from “tens of thousands.” An oil contractor hired by the State Department reported it would create between 5,000 and 6,000 temporary jobs, while an independent study by Cornell University found it would create only 500 to 1,400 temporary jobs. Once the costs of the increased pollution and risk of oil spills is factored in, Cornell found, the jobs impact is likely to be negative.

The “118,000 spin-off jobs” number used by TransCanada received two Pinocchios from the Washington Post Fact Checker:

As opponents have documented, if the capital costs are lower than predicted, and if the multiplier is smaller, then the number of “spin-off jobs” can shrink dramatically. The same goes for the estimates of “permanent jobs,” which depend also on the price of oil.
….
Among the list of jobs that would be created: 51 dancers and choreographers, 138 dentists, 176 dental hygienists, 100 librarians, 510 bread bakers, 448 clergy, 154 stenographers, 865 hairdressers, 136 manicurists, 110 shampooers, 65 farmers, and (our favorite) 1,714 bartenders.

Maybe we can harness all that Tea-Publican hot air as an energy source.