After a year of budget-hawking, Congress last week undid much of that progress in one swoop, adding more than $100 billion to the federal deficit in 2012 by extending the payroll tax cut but not paying for it.
The final deal — reached after frenzied negotiations between House Republicans and Senate Democrats — delivered a near-total victory to President Obama, who had demanded what became the big elements: an extension of the 2 percentage-point payroll tax cut, a renewal of enhanced unemployment benefits and full payments for doctors who treat Medicare patients.
Republicans, meanwhile, took solace in playing defense this time, saying it was better to deepen deficits for the tax cut rather than agree to Mr. Obama’s plan to raise taxes on the wealthy.
“This agreement shows Congress can govern, and Washington can work,” said Rep. Dave Camp, Michigan Republican and chairman of the Ways and Means Committee.
Both House and Senate votes were bipartisan, with the Senate voting 60-36 in favor, just minutes after the House voted 293-132. In both chambers, more Democrats voted for the agreement than did Republicans, though a majority of GOP lawmakers did still back it.
Some in both parties saw the vote as an abdication.
“Why is it that the only time we can come together and reach an agreement, it’s in a manner that increases the deficit or explodes spending?” said Rep. Jeff Flake, Arizona Republican. “That’s enough to make the country cry for more partisanship.”
Sen. Mark Warner, Virginia Democrat, said in striking the deal lawmakers reminded him of Wimpy, the character from Popeye who was always trying to mooch off others, with his catch-phrase “I’ll gladly pay you Tuesday for a hamburger today.”
“Wimpy once again has won out,” Mr. Warner said on the Senate floor Thursday, ahead of the Friday showdown vote.
The payroll tax holiday is worth $1,000 to the average American taxpayer this year, and both sides were loath to let it expire. But they had fought for months over how to offset the lost revenue, with Republicans insisting on spending cuts and Democrats demanding other tax increases instead.
In the end, they agreed not to pay for the tax cut at all, tacking the cost onto the deficit, which will now be $101 billion deeper in 2012.
It’s just the latest time that a bipartisan deal has given each party some of what it wanted, but at the expense of future taxpayers who will have to pick up the tab for the higher debt.
It’s also a replay of the lame-duck Congress in 2010, which first created the payroll tax holiday at the insistence of Mr. Obama.
In a deal he struck with Senate Minority Leader Mitch McConnell, Kentucky Republican, the GOP agreed to accept the payroll tax holiday and expanded unemployment benefits, while Democrats agreed to extend the 2001 and 2003 tax cuts through the end of this year. None of those provisions was offset by corresponding spending cuts or tax increases, leaving the deficit hundreds of billions of dollars deeper.
This week’s deal didn’t splash as much red ink.
Republicans insisted that an extension of full payments to doctors who treat Medicare patients be coupled with spending cuts, and they offset about two-thirds of the added unemployment benefits as well.
Still, that also breaks the pay-as-you-go rules both parties say they want to adhere to.
The legislation includes full reimbursement rates for doctors who treat Medicare patients, and that $18 billion cost was covered by cuts to other parts of the health care budget — including several programs called for in Democrats’ health care overhaul law.
The $30 billion in additional unemployment benefits are not fully paid-for, but Congress did tack on new fees for future federal workers’ pensions, and agreed to auction off rights to some parts of the communications spectrum to raise more money.
Senators and representatives from the Washington region voted against the legislation, arguing it was unfair to demand more of federal workers.
“This Congress is on the path to be the most anti-federal worker Congress that I have served in,” said Rep. Steny H. Hoyer of Maryland, the second-ranking Democrat in the House.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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