The Drama Over the Payroll Tax Comes to an End ... For Now

The Drama Over the Payroll Tax Comes to an End ... For Now

Nowadays, news of the U.S. government’s inability to agree hardly strikes us as, well, newsworthy.

Over the summer, politicians' brinksmanship over the debt ceiling crisis was cited as one of the reasons for the U.S.’s credit downgrade, and the political infighting has hardly lessened since then. But with the financial well-being of 162 million Americans at stake, you would think that our politicians might have tried a little harder to reach across the aisle and play nice.

Unfortunately, the holiday spirit didn't have much of an effect on Washington.

For two nail-biting days this week, the fate of the payroll-tax break and unemployment benefits that help 162 million Americans was up in the air. On Tuesday, Republican members of the House of Representatives refused to pass a Senate-approved bill that proposed to extend the tax break and benefits for another two months in order to give Congress more time to work out the details for a longer-lasting plan.

If the plan had not passed, 160 million Americans would have seen their taxes rise an average of $1,000 in the next year, while two million unemployed workers would have stopped receiving benefits by the middle of February.

On Thursday afternoon, however, Republican House leaders finally decided to accept the temporary extension, after receiving pressure from the president, Democrats in Congress and, most importantly, Republican leaders in the Senate. The House Republicans' refusal to pass the bill was interpreted as hurting the G.O.P.'s chances in the 2012 election season.

All along, the House Republicans' intent was not to block the tax break or discontinue unemployment benefits, but rather to extend both for a longer period such as a year, or even longer. To that end, the Republican reps accepted the deal under the condition that congressional Democrats would quickly reopen negotiations for a yearlong plan.

So while we'll surely be hearing of more political squabbling over the payroll tax in the next two months, for now, the holidays and the new year are looking a whole lot merrier for the 162 million Americans who won't shortly be facing higher taxes or dried-up unemployment benefits.

Image Credit: Flickr/Gage Skidmore

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