Happy Holidays From House Republicans … Worries For DC Workers

So the House Republican majority has decided not to go along with the Senate’s bipartisan bill to temporarily extend the employee payroll tax cut and long-term unemployment benefits.

Decided, in fact, not even to vote on the bill — or rather, Speaker John Boehner did. This allegedly because he feared the bill would pass.

The Republicans have instead chosen to call for a House-Senate conference, i.e., negotiations to resolve the differences between their highly problematic bill and what the Senate passed.

Given the position they’ve taken, it would have to be a full-year extension — exactly what Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell decided they couldn’t work out before the tax cut and UI extensions expire.

What will happen now is anyone’s guess. We do know, however, that more than 1.8 million jobless workers and their families will probably spend a very anxious holiday season.

And what if there are no extensions at all? The Center for American Progress summarizes the big picture and maps the impacts for every state and the District of Columbia.

Nationwide, more than five million jobless workers will exhaust their benefits before the holidays roll round again. About 160 million working workers will get smaller paychecks — leaving them, on average, with $1,000 less for the year.

Here in the District, payroll tax cut losses will average $1,100.

And 14,200 jobless workers will run out of the UI benefits they would have had if Congress had extended the federal programs, with just a technical change to reflect the unusually long duration of high unemployment rates.

I’d like to think this won’t happen. But then I never thought House Republicans would delivery such a nasty holiday gift.

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2 Responses to Happy Holidays From House Republicans … Worries For DC Workers

  1. Could you speak on how keeping the employee’s share of the payroll tax at 4% (instead of 6%) will affect the Social Security Trust Fund? My understanding is that the whole purpose of paying a payroll tax in the first place is to generate the funds that workers will need to draw from Social Security throughout their retirement. How will this full tax year – where workers paid 2% less than usual into the trust fund who earned less than $110,000 – and any additional future payments at 4% (if Congress authorizes it) affect the trust fund? No one in the media is discussing this and it drives me crazy.

  2. Kathryn Baer says:

    I’m glad you asked, spirit, because many people seem confused about this, including some policymakers.

    Briefly, the temporary 2% payroll tax cut will have no impact on the Social Security Trust Fund because general revenues will be used to compensate for what employees won’t pay in. This is the same arrangement that’s been keeping the Trust Fund whole during the current year.

    It’s actually somewhat more complicated than that because the Trust Fund is actually an accounting device rather than a pot of cash money. But the bottom line is still the same. No loss in what the Trust Fund will have to pay benefits.

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