House GOP rejects payroll tax cut, demands talks with Senate - WRCBtv.com | Chattanooga News, Weather & Sports

House GOP rejects payroll tax cut, demands talks with Senate as deadline looms

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WASHINGTON (AP/WRCB) - The House has rejected a plan to extend a Social Security payroll tax cut for two months, and Republican members are instead demanding that the Senate return to negotiate an extension for the entire year.

Lawmakers voted 229-193 to send the measure back to the Senate.

But Majority Leader Harry Reid says he will not allow any bargaining until the Republicans relent and the House approves the short-term bipartisan measure which passed the Senate with an overwhelming majority.

President Barack Obama has voiced support for the legislation, but has also said it needs to be quickly extended to cover all of 2012.

The House passed a full-year extension last week, but included many spending cuts opposed by Democrats.

Republican members erupted in frustration at the Senate measure, which drops changes to the unemployment insurance system that conservatives wanted along with cuts to Obama's health care law.

Lawmakers are looking to renew a 2 percentage point cut in the Social Security payroll tax, plus jobless benefits averaging about $300 a week for the long-term unemployed.

The impasse could mean a tax hike for 160 million American workers in January, while almost 2 million people could lose their unemployment benefits.

Here's what all of this means for you:

If a payroll tax cut extension isn't passed before the end of the year, working Americans will pay higher taxes.

The tax cut began in 2009 as part of the American Recovery and Reinvestment Act. It was called the "making work pay tax credit".

Basically, it reduced the amount people paid toward Social Security by two percent, which gave many of you a raise

But if an agreement isn't made in Washington, that two percent will be taxed, and you will lose that extra money.

That mean a paycut of up to $400 dollars for some.

Jobless benefits will also run dry for many of the long-term unemployed, which means 2.2 million Americans will lose their unemployment benefits.

And 48 million seniors could lose Medicare doctor reimbursements.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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