Government shutdown averted as $1 trillion bill nears passage

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The two-month extension would let lawmakers revisit the measure after returning to Washington after the holiday season. That could be risky because that work would come well into the 2012 presidential and congressional election year.

(Photo: Flickr/cometstarmoon)

Without congressional action, the payroll taxes would rise and extra benefits for the long-term unemployed would expire on Jan. 1. Doctors' Medicare payments would be automatically reduced that day by 27 percent, a reduction that could prompt some to stop seeing Medicare patients.

"Right now, Congress needs to make sure that 160 million working Americans don't see their taxes go up on Jan. 1," said Obama, referring to the tax cut extension at the core of the jobs program he outlined in a nationally televised speech three months ago.

At Obama's insistence, Congress cut the 6.2 percent Social Security payroll tax to 4.2 percent this year in an effort to stimulate the economy with more consumer spending. The president has proposed deepening the cut to 3.1 percent next year, but Republicans have only shown a willingness to renew it at this year's level.

Obama also wants to leave in place a system that provides aid for up to 99 weeks for the long-term unemployed. The House-passed measure reduces the total by 20 weeks, a step that the administration says would cut off 3.3 million individuals and that Democrats are hoping to soften if not reverse.

Reid indicated that a number of expiring tax breaks were on the table, as well, a list that included a provision that benefits commuters who use mass transit.

The House-passed payroll tax cut measure relied on a pay freeze and increased pension contributions for federal workers, as well as higher Medicare premiums for seniors with incomes over $80,000, beginning in 2017. The bill would also raise a fee that is charged to banks whose mortgages are guaranteed by Fannie Mae and Freddie Mac and cancel more than $40 billion from the year-old health care bill, Obama's signature domestic achievement.

The year-end, $1 trillion spending measure would lock in cuts that Republicans extracted from Democrats in negotiations conducted months ago against the deadline of a previous government shutdown threat. It funds 10 Cabinet departments, including the Pentagon and dozens of smaller agencies, awarding a slight increase to the military and veterans' programs while trimming most other domestic programs.

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