Congress Split on Extending Unemployment Benefits and Payroll Tax Cuts

House Republicans are drafting legislation that would renew an unemployment benefits program set to expire on December 31. They intend to add the measure to a planned extension of a Social Security payroll tax cut also due to run out at the end of the year.

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The measure could be presented on the House floor as soon as next week. Republican officials say the cost of extending the two programs will be outlined within the measure, making sure deficits don’t rise as a result.

President Obama urged Congress in September to renew and expand the payroll tax cut he signed a year ago, and also called for an extension of benefits that can cover up to 99 weeks for the long-term jobless.

It is unclear whether Republicans intend to propose any changes for the unemployment benefit portion of the bill, but the Senate has become divided over how to pay for the $119.6 billion payroll tax break.

While Senate Democrats want to levy a 3.25 percent surtax on people earning more than $1 million a year to pay for the Social Security payroll cut, Senate Republicans unveiled an alternative on Wednesday that relies on freezing federal workers’ pay through 2015 and reducing the federal civilian workforce by 10 percent, or roughly 200,000 jobs.

While the proposed pay freeze would apply for all civilian employees of the executive branch, along with members of Congress and their staffs, it doesn’t appear as though the 10 percent workforce reduction would apply to congressional staff, based on the text of the bill.

The Republican proposal would also require the highest earners to pay the full cost of their Medicare premiums and would prevent them from receiving unemployment compensation and food stamps. The proposal would generate $222 billion in savings over the next decade, and reduce federal budget deficits by about $111 billion.

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Senate procedural votes on the competing proposals could occur as soon as today, but lawmakers don’t expect either approach to win the 60-vote majority needed to advance.