January 30, 2012

The Charge Ahead

Guest column submitted by U.S. Senator Mike Crapo

In December, Congress passed and the President signed legislation to temporarily extend a number of expiring provisions, including temporary payroll tax relief, with an agreement that a conference committee would be formed to reach agreement on a full-year payroll tax extension.  I am honored to serve on this conference committee that will consider payroll tax reductions and address unemployment and health care issues.  The following is an explanation of some of the issues in the legislation before this conference committee.

Payroll Tax Reduction:  In 2010, Congress passed legislation providing a temporary 2 percent reduction in the Social Security payroll tax rate for employees and the self-employed.  Thus, for 2011, the Social Security payroll tax was 4.2 percent for employees and 10.4 percent for self-employed workers.  This meant that the withholding for a worker earning $44,687 was decreased by $894 and by $2,136 for a worker earning $106,800.  The temporary reduction did not change the Social Security tax rate for employers, the amount of wages and net self-employment income subject to the Social Security payroll tax, or an individual's future Social Security benefit amount.  Given the economic situation, the reduction in the payroll tax was meant to enable workers to take home more of their income.  The legislation enacted in December extended the payroll tax reduction for workers for two months, through the end of February 2012.  The conference committee will consider a full-year extension of the payroll tax reduction.      

Unemployment Insurance:  The authorization for a number of unemployment insurance programs is scheduled to expire.  For example, the temporary Emergency Unemployment Compensation, which provides the majority of extended unemployment benefits, is scheduled to expire the week ending on or before March 6, 2012, and the 100 percent federal financing of the Extended Benefits program will expire on March 7, 2012.  With a continued, high national unemployment rate, the conference committee will be determining how to address unemployment insurance and whether additional weeks of unemployment benefits are needed.      

Medicare Physician Payment Rates:  One of the major health care related provisions under consideration by the conference committee is how to further address the Medicare payment fix.  The Sustainable Growth Rate (SGR) provides for annual updates to the Medicare physician fee schedule.  The rate was established to address concerns that the Medicare fee schedule would not sufficiently limit spending increases for physician's services.  However, considerable concern prevails that the SGR system is defective and declines in physician payment rates under the system may jeopardize access to services.  The legislation enacted in December provided a two-month override of the SGR payment reduction through February 2012.    

Keystone Pipeline:  The legislation enacted in December also provided 60 days for the President to grant a permit for the Keystone XL pipeline project application filed on September 19, 2008 unless the President determines that the pipeline would not serve the national interest.  The Keystone XL pipeline, with the capacity to transport 830,000 barrels per day, would move crude oil from Alberta, Canada to refineries on the U.S. Gulf Coast.  Senator John Hoeven (R-North Dakota) is preparing legislation to nullify the recent Presidential rejection of the pipeline.  The pipeline is the U.S. Chamber of Commerce's number one energy issue, and it is supported by labor groups.

Americans need long-term tax and regulatory certainty to encourage innovation and growth.  I welcome the opportunity to help reach agreement on these issues.  While this conference committee will be addressing a sliver of the issues Congress must tackle, longer-term certainty on these key issues is an important step.  I value your input, and encourage you to share your thoughts with me throughout the process.   

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