Deal preserves payroll tax cut for Nevadans

WASHINGTON -- A hard-fought agreement unveiled in Congress on Thursday has cleared the way for more than a million working Nevadans to continue receiving a tax cut in their paychecks through the remainder of the year.

For people still struggling in the worst-in-the-nation job market, the news was more mixed. The deal renews federal funding for payments to people out of work for more than six months but scales back the maximum number of weeks that someone can collect from 99 weeks to 73 weeks by the end of the year.

Legislation carrying out the $143 billion agreement was expected to pass the House and Senate before lawmakers go home this weekend for a weeklong recess. It would bring to an end, at least through the November elections, disputes over Social Security payroll tax cuts and benefits the Obama administration and congressional Democrats consider key to sustaining economic recovery.

"This legislation will let middle-class families keep more of their money, and it will allow the economy to continue to grow," said Sen. Harry Reid of Nevada, the Senate majority leader. "It also guarantees hardworking Americans looking for a job in this tough economy will not have the safety net ripped out from under them."

The package was gaining grudging acceptance from some Republicans, while others continued to protest that it will do little to spark the economy while adding $89 billion to the deficit over the next decade.

"Let's be honest, this is an economic relief package, not a bill that's going to grow the economy and create jobs," said House Speaker John Boehner, R-Ohio. But Republicans, who took a public relations bath in a fight over similar legislation late last year, decided not to draw another line in the sand.

Nevada lawmakers said they were disappointed in the eventual cutbacks in maximum weeks of unemployment benefits with the state's jobless rate at 12.6 percent, still highest in the nation. But none signaled that would be a deal-breaker weighed against other elements, chiefly the continuation of a payroll tax cut that will mean money in the pockets of 1.2 million Nevadans and 160 million workers nationwide.

The 2 percentage-point cut would fatten a typical bimonthly paycheck by $40.

The legislation also averts a scheduled 27 percent reduction in federal payments to doctors who treat people enrolled in Medicare, a cutback that some feared would lead health care providers to drop patients.

Sen. Dean Heller, R-Nev., called the bill "a balanced package to provide those who are going through difficult times much needed relief."

Even as maximum weeks of un­employment benefits are scaled back, Heller noted that the jobless in the hardest-hit states such as Nevada will collect an additional 10 weeks compared with others, making the package in one way more generous than under current law for at least the next few months.

Rep. Shelley Berkley, D-Nev., said the package of unemployment benefits was "the best deal we could get for those who are out of work through no fault of their own" in the face of Republican insistence on deeper cutbacks, down to 59 weeks. A spokesman said she plans to vote for the bill.

The final legislation also rejected GOP-proposed barriers for people to claim unemployment, such as requiring applicants to have a high school diploma or to be enrolled in a GED program and to undergo drug testing.

"We were unwilling to do some mean-spirited things to further embarrass people who are the recipients of un­employment insurance," Reid said.

In answer to critics who said jobless benefits are a disincentive for people to look for work, "Everyone who said that has a job," Reid said.

In Nevada, unemployed workers would continue to be eligible for 99 weeks of benefits until mid-August, according to a breakdown provided by Democrats. At that point, the number of available weeks falls to 89. In September, the maximum number of weeks would fall to 73.

Rep. Mark Amodei, R-Nev., said he was weighing his vote.

"On the one hand you get a little bit of stability for some folks, you get 10 months of payroll and unemployment and that stuff and that is all good," Amodei said. But he said he was discouraged that the payroll tax cut was not coupled with reforms in Social Security and that $100 billion of its cost was not being offset by other cuts or revenue hikes.

Amodei said he was told by the Nevada Department of Employment, Training and Rehabilitation that the average Nevadan stays on unemployment for 44 weeks. "I know that doesn't cover every­body, but when you scale it back to 73 weeks, that is a pretty big buffer beyond what our state says is the average."

Rep. Joe Heck, R-Nev., was continuing to study the bill, according to his chief of staff.

The pact was sealed after weeks of negotiations. Among its parts, it would prevent welfare recipients from using their electronic benefits cards to withdraw money at ATMs in strip clubs, casinos and liquor stores.

But in the course of forming an agreement, negotiators got hung up and scrapped extending dozens of smaller tax benefits targeted to businesses and families. Those included extending a deduction for state and local sales taxes, a tax break enjoyed by Nevadans and residents in a few other states.

The tax break expired on Dec. 31, meaning people can take the deduction on their 2011 returns for purchases they made last year. But it remains up in the air whether sales taxes on items bought this year will be eligible for a write-off. Congress might not revisit the issue until after the November elections.

According to the Internal Revenue Service, 316,038 Nevadans claimed $456 million in 2009 deductions for state and local sales taxes. A study this week found the typical Nevadan pays 7.93 percent in sales taxes, the 13th-highest rate in the country.

The Associated Press contributed to this report. Contact Stephens Washington Bureau Chief Steve Tetreault at or 202-783-1760.