Tax cut extension plans split Inland delegation

By Ben Goad

The Press Enterprise

WASHINGTON – As the debate over extending a soon-to-expire payroll tax cut and benefits for the unemployed nears a crescendo in Congress, few corners of the nation have more at stake than does economically battered Inland Southern California.

The region’s federal delegation is divided on the issue, with Republicans embracing a controversial House extension bill and Democrats coalescing behind a competing plan still being crafted in the Senate. Disagreement revolves around how to pay for the legislation, the duration of benefits for the jobless and whether to include additional provisions related to health care, air quality and oil production.

At the core of both would be an extension of the payroll tax cut, for which there is broad bipartisan support. If Congress does not act by the end of the year, workers would be taxed at a 6.2 percent rate on the first $110,000 they earn in the next year, up from the current 4.2percent rate. That would translate to an average $1,000 to $1,500 tax increase for roughly 160 million people at a time when Riverside and San Bernardino counties have some of the country’s highest poverty rates.

“A lot of our people live paycheck-by-paycheck,” said Rep. Joe Baca, D-Rialto. “For them not to receive that income would make it very difficult for them … and we’re already No. 1 in poverty in our area.”

The Republican-backed measure passed the House on Tuesday by a tally of 234-193. The region’s four GOP House members – Reps. Ken Calvert, Jerry Lewis, Mary Bono Mack and Darrell Issa – each voted for the bill; Baca voted against.

Bono Mack, R-Palm Springs, praised the bill’s passage.

“It helps hard-working Americans by extending the payroll tax cut for another year, without borrowing any money or raising our national debt,” she said. “It also extends and reforms the federal unemployment insurance program.”

The bill approved in the House would cut from 99 to 59 the number of weeks that jobless people are eligible for benefits. It also would require recipients to actively search for work while they are on the public dole. Most Democrats want to continue the 99-week limit. The unemployment rate in the Inland area is above 13 percent, almost five points higher than the national average.

The House legislation also would stave off a scheduled cut in payments to doctors who treat Medicare patients and raise Medicare premiums for seniors making $85,000 or more. The cost of the legislation – an estimated $200 billion over the next decade – is offset by the Medicare savings and other federal spending cuts.

“It’s paid for,” said Calvert, R-Corona.

But opponents of the bill, who include California’s two senators, have a different plan to pay for the extensions. Congressional Democrats and the Obama administration are pushing for a surtax charged to people with incomes over $1 million.

They also object to a series of other provisions attached to the House bill, including a measure to repeal and eventually replace the Environmental Protection Agency’s new pollution standards regarding industrial boilers. Sen. Barbara Boxer, D-Calif., said the standards, if left in place, would prevent thousands of premature deaths, along with tens of thousands of asthma attacks and lost workdays.

Republicans’ insistence on including such provisions shows they’re more interested in bogging down the legislation and protecting the wealthy than passing the extensions, Boxer said.

“Clearly they don’t really care about this tax cut,” she said. “If they did they would have put forward a bill that’s clean and is paid for by a little, small tax on people who earn more than a million dollars a year.”

Even more contentious is the inclusion of language meant to fast-track approval of a permit for the planned Keystone XL Pipeline, which would connect Canadian oil sands with U.S. refineries. The Obama administration has said a decision on the pipeline would have to await environmental analysis, which is not expected to be complete until after next year’s elections.

The House-approved bill would require a permit to be granted within 60 days of final passage, unless Obama deems the project is not in the nation’s best interest.

Calvert called the $7 billion pipeline a job creator and warned of reports that China also is in talks for the Canadian oil.

“It puts twenty-some thousand people to work,” Calvert said of the project. “I’m all for it, especially now.”

Boxer said the project needs more study before it can move forward. Baca, meanwhile, said he supports the Keystone project but objects to its inclusion in the extension bill, calling it a “poison pill” that should be taken up for consideration on its own merits.

Hours before the House bill passed, Obama signaled his intention to use his power of veto if it passes the Senate and lands on his desk.

Debate now moves to the Senate, where leader Harry Reid said Democrats have enough votes to block it. That would place the two sides at an impasse with less than three weeks before the tax cut and benefits are scheduled to expire.

Congress is expected to begin its holiday recess before then, adding to the urgency.