What’s Happening with Seniors Benefits

by Art Kelly

The Senate greatly improved the House-passed payroll tax cut bill 89-10, but the House rejected that amendment 229-193 and asked for a joint conference committee to iron out the differences in the two versions.

Senate Republicans overwhelmingly backed the amendment, but only 7 GOP House members voted against rejecting the Senate amendment:

Charlie Bass (NH)
Jamie Herrera-Beutler (WA)
Jeff Flake (AZ)
Chris Gibson (NY)
Tim Johnson (IL)
Walter Jones (NC)
Frank Wolf (VA)

Wolf, who also voted against HR 3630 when it passed the House, stated:

I do not support any of the costly proposals to extend the temporary payroll 'holiday,' which destabilizes the Social Security Trust Fund and does nothing to enact the needed long-term structural reforms necessary to right our fiscal ship of state.

Our country is going broke.  The national debt is over $15 trillion.  It is projected to reach $17 trillion next year and $21 trillion in 2021. We have annual deficits of approximately $1 trillion. We have unfunded obligations and liabilities of $62 trillion.

Flake, who also opposed HR 3630 when it passed on December 13, said:

"The extension of the payroll tax holiday will hasten the insolvency of Social Security and exacerbate our fiscal crisis.  Even worse, we're using dishonest budget gimmicks that supposedly pay for this one-year extension with spending cuts or new fees over ten years that we all know will never materialize."

Five Republican House members were absent and did NOT vote:

Michele Bachmann (MN)
Vern Buchanan (FL)
Howard Coble (NC)
Mario Diaz-Balart (FL)
Ron Paul (TX)

Last week's issue of this newsletter reported that HR 3630, to keep the payroll tax which funds Social Security at 4.2%, rather than the normal 6.2%, for another year through the use of massive deficit spending, passed the House 234 to 193.

This legislation would have increased the deficit by $166.759 Billion in FY 2012, by an additional $70.281 Billion in FY 2013, and by $6.915 Billion more in FY 2014, for a total of $244.175 added to the national debt. 

In theory, projected spending cuts over 10 years would have resulted in a net $5.835 Billion reduction in the deficit. But no one really believed those future spending cuts would actually happen.

When the House bill got to the Senate, the upper chamber took out the deficit spending and extended the payroll tax cut for two months, to be financed by fees on Fannie Mae mortgages, at a cost of $30.063 Billion.

Conservatives could hope that, after two months, Congress might think better of the payroll tax cut, which has not helped the economy and may have hurt it, and "call it a day."

According to Charles Blahous, one of the two public trustees of the Social Security system and former executive director of President Bush's Commission to Strengthen Social Security, using money from the Treasury, rather than the payroll tax, to pay benefits "could eventually end" the retirement program.

But if Congress did extend the payroll tax cut for the additional 10 months in 2012, there would be time to find a way to pay for it that did not add almost a quarter of a Trillion dollars to the national debt.

The Senate version also contained the same wording as the House bill requiring the construction of the Keystone XL Pipeline from Canada to oil refineries in Texas unless President Obama certified it was not in the national interest.  While Obama might have made that certification, it would have been politically costly for him.

With all of the advantages of the Senate amendment to HR 3630, which had the strong support of Senate Minority Leader Mitch McConnell (R-KY) and 39 of the 47 Republican senators (and one senator did not vote), it appeared to be a big plus for the GOP.

The Washington Post's Felicia Sonmez explained:

By the time the battle had moved on to the two-month compromise negotiated by McConnell and Senate Majority Leader Harry Reid (D-NV) last week, the upper hand had shifted back to the GOP.

Republicans in the House had succeeded in turning a debate over the payroll tax holiday into one over the Keystone XL sands pipeline, GOP lawmakers argue will lead to the creation of thousands of jobs.

So when news leaked out Friday night of a two-month McConnell-Reid compromise including the Keystone provision, it appeared the GOP had scored wins on two fronts--both on the pipeline and on neutralizing the Democratic offensive on the payroll tax issue, at least over the holidays.

But strangely, when Speaker John Boehner explained the deal to Republican House members in a conference call, he reportedly ran into resistance.  The call was private and no legislators have been mentioned opposing the deal, but apparantly some thought that the extension of the payroll tax cut should be for 12 months, not just 2 months.

That hardly seems a big obstacle to overcome, but CQ-Roll Call hints that House Majority Leader Eric Cantor (R-VA) may have had a role in fostering dissention with an eye to deposing Boehner as Speaker.

The Virginian's trigger finger is clearly getting itchy; the GOP cloakroom is rife with chatter about how Cantor knew that Boehner was walking into a rank-and-file buzz saw when he signed off on the two-month deal--but declined to offer any advance warning before the Speaker took on a fusillade of criticism in a conference call with his caucus.

What Boehner should have done is to patiently explain to House members who did not understand, is that the Senate's 2-month extension was meant as a placeholder to give time to work out alternate funding for the payroll tax cut. After solving the problem of where the money would come from, the payroll tax would very likely be maintained at 4.2% for the additional 10 months.

He should have been forceful in letting members know there was not enough time to solve these problems before the end of December.  He should have been emphatic that, if the House failed to promptly approve the Senate amendment, there would be tremendous criticism of Republicans in the House and the GOP would suffer a serious public relations blow.

Of course, that's exactly what happened.

Instead, Boehner did not provide the required leadership and acquiesed to the uninformed views expressed in the conference call.

It is possible Boehner may have also had his own reason for opposing the Senate amendment, which took out all of the deficit spending.  The Speaker may have feared that whatever alternatives were found to finance the payroll tax cut might have been distasteful to him.  He could have gambled that, given the need for quick action, the Senate might have agreed to the deficits in the House version of HR 3630.

When this bill passed the House on December 13, one Congressman who voted for it told me privately that he had asked Boehner if there could be spending cuts in FY 2012 to help finance the payroll tax cut.  Boehner firmly replied: NO!

At this point, it is likely all Republicans in the House finally understand what they have done has been highly destructive to their cause.  They should quickly approve the Senate amendment and send the bill to the President.

Although almost all House members have gone home for Christmas, the House is technically still in session.  The Senate amendment could be approved by a voice vote--no one is going to demand a roll call--of those few who are present.

There may even be a way for the Speaker to "save face." He could say that he preferred to work out all of the necessary details in the legislation immediately, but since it just "isn't in the cards," he will adopt the Senate lanaguage and work with the Senate in Janaury to determine the best way to proceed in 2012.

As Kenny Rogers sang in the The Gambler, "You've got to know when to hold 'em, know when to fold 'em."

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