House Minority Leader Nancy Pelosi released a statement that probably secures passage for a standalone, unfunded payroll tax cut:
“The House Republican leadership plans to bring to the floor a stand-alone payroll tax cut extension bill tomorrow. We have long proposed bringing this tax cut to the floor without payfors and House Democrats will support it so that taxes are not raised on 160 million working Americans, but this should not be a substitute for the work of the Conference Committee.
“We continue to call upon the conferees to resolve the remaining issues — extending unemployment benefits and ensuring seniors can continue to see their doctors under Medicare — by February 17. If the Conference Committee is unable to complete its work on a comprehensive bill by that date, the Republican leadership should cancel the recess and remain in Washington next week. These crucial policies affect millions of middle class families and seniors and must not expire at the end of this month.”
As I understand it, the House GOP may try to pass this on the suspension calendar, which would require a 2/3 vote. With Pelosi’s blessing, I would expect the vast majority of Democrats would provide support, meaning that the bill could get 2/3 even without a majority of Republicans. I’ve heard plenty of Republican grumbling, but not quite enough to occasion a revolt. But we’ll have to see tomorrow.
The real question here is in the Senate. If Democrats can hit upon $50-$60 billion in offsets, they can attach an extension of unemployment insurance and a “doc fix” to the unfunded payroll tax cut bill coming from the House, and then send it back, putting the House in the same precarious position it was in just a couple months ago, on the clock with the payroll tax cut extension on the line. But will Senate Republicans allow their counterparts to be put in that position? They certainly did in December. It probably depends on the pay-fors, and whether Republicans want to extract some policy changes to the unemployment system, like mandating drug testing or a GED as a condition of the benefits.
Politico reports that a deal is imminent. And it’s really not good.
Under the potential plan, the two-percentage point payroll tax cut would be extended until the end of the year — and the $100 billion cost would be added to the deficit. Unemployment benefits would be extended for the next 10 months, at a cost of $30 billion, and doctors who serve Medicare patients would avoid seeing their payments cut at a cost of $20 billion.
The approximately $50 billion for the so-called “doc fix” and jobless benefits would be offset by cuts to the budget. And sources said the two sides were nearing an agreement to reduce the length of jobless benefits.
The House GOP would like to get below the 79 weeks of unemployment benefits that Obama administration requested. It is likely that agreement will include a series of stages that will begin above 79 weeks, and then drop down below that number, sources said.
So 79 weeks is the high-water mark at this point. We got here because the two-month extension didn’t increase the “look back” for the final, 20-week Extended Benefits tier of unemployment insurance. That meant that many states where the unemployment rate has dropped would soon lose the ability to access that Extended Benefits program. It’s already happened in Michigan, for example, with 30,000 long-term jobless getting cut off.
The major problem in unemployment right now is at the higher end. Millions of people have been out of work for long stretches; the average length of unemployment is something like 42 weeks. By cutting back coverage from 99 weeks to 79 weeks – and potentially more – hundreds of thousands of people in desperate straits will lose their benefits, and it’s unclear that the modestly improving labor market will allow them to get jobs anytime soon.
Stay tuned, this is taking a sour turn…
UPDATE: Chuck Schumer:
Senate Democrats have said they want the maximum duration of benefits reduced to 93 weeks — even though legislation that Democrats supported in December has already set in motion a gradual reduction of benefits to 79 weeks over the course of this year.
Schumer suggested Democrats may be willing to compromise on some elements of the unemployment system, but he declined to be specific.
“Obviously there are negotiations going on about what form [unemployment insurance] should take, but I’m not going to get into those details now,” Schumer said. “[Republicans] have all kinds of changes to UI and many of those changes are very unfavorably regarded by our caucus.”