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Blog: Take It All With a Grain of Salt

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As I wrote yesterday on Facebook, I always find it reassuring that the country goes about daily life without hanging on the latest maneuvering in Washington. The country is bigger and more resilient than any President or any Congress -- thankfully.

But the issues facing the government and how they are handled are important. And American workers are affected. So, here is the state of play on the most current dispute between the House, on one side, and most of the Senate and President Obama on the other.

Last week, the House passed a bill to extend the lower rate of payroll taxes for another year. That translates into about $1,000 more in the pocket of a worker earning $50,000 a year.

The bill also provided an extension of unemployment benefits for a year with some important reforms. For example, states would be allowed to require drug screening of those who receive unemployment benefits. And the total number of weeks that someone can receive unemployment benefits would be reduced from the current 99 weeks to 59 weeks.

The third provision prevents a 27% cut in physician reimbursement under Medicare for the next two years. If those reductions take place, it will be even harder to find a doctor who accepts Medicare.

The bill also included language to force the President to make a decision on the Keystone XL pipeline and reform some recent rules proposed by the Environmental Protection Agency.

The cost of all of those provisions is offset by other cuts in spending, including some of the new spending in the Obama health care bill and a pay freeze for federal civilian employees, including Members of Congress

On Saturday, the Senate passed a two month extension of the payroll tax, unemployment compensation, and physician reimbursement. It was offset with higher fees charged to home buyers and those refinancing their mortgage under Fannie Mae and Freddie Mac.

Today, the House voted not to accept the Senate bill, and to go to conference with the Senate to work out the details of a year-long bill. I do not know how Senate Majority Leader Reid will respond.

Some may see this episode as a typical partisan fight. I think the differences between the House and Senate approaches are important.

First, it is very difficult for employers and physicians to function with a law that is renewed a few weeks at a time. There is a great deal of uncertainty in the economy, and extending these provisions for two months, setting up the exact same fight again at that point, only adds to the uncertainty. We need to settle these issues for a longer period. (I would prefer to settle them permanently, but a year is the minimum time that allows businesses and workers to plan.)

Second, Congress delays decisions too often. Here the Senate was understandably anxious to wrap up the year's business, and voted 89 to 10 for the two month extension. They had been working on a bill more like the House bill but had trouble agreeing on the offsets. So they punted. But a responsible agreement on many of these issues is certainly possible. (view the differences between the House and Senate bills here)

Finally, I am not particularly pleased with several of the provisions in the House bill. But it does include the beginning of some reforms to the unemployment compensation program that are badly needed. We need to help move people from the unemployment rolls into jobs. These reforms and a bit more certainty in the economy can move us in that direction.

I have no doubt that the political rhetoric will be flying in the days ahead. Take it all with a grain of salt.


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