Tags: payroll | tax | cut | extension | CBO | budget | deficit

CBO: Payroll Tax Cut Will Add $89 Billion to Deficit Over 10 Years

By    |   Friday, 17 February 2012 12:28 PM

Congress’ payroll tax cut extension agreement included some offsets to reduce the deal’s impact on the budget deficit. But the offsets don’t eliminate that impact, according to the Congressional Budget Office.

The CBO estimates that the accord will add $89.3 billion to the deficit over the next 10 years, The Hill reports. The Senate approved the $143 billion measure by a bipartisan 60-36 vote Friday. That tally came minutes after the House approved it by a sweeping 293-132 vote.

Obama is expected to sign it into law shortly after returning from a West Coast fundraising swing, The Associated Press reported.

In addition to continuing the payroll tax reduction, the package extends federal unemployment benefits and the "doc fix," which negates a scheduled cut in Medicare reimbursements to doctors.

The offsets are an estimated $15 billion in spectrum sales, $15 billion in increased retirement contributions by new federal employees, and $18 billion of cuts in healthcare entitlements, The Hill reports.

All of the deficit damage will actually be done this year, according to the CBO. The accord will widen the deficit by $101 billion in fiscal year 2012, but the offsets will trim that total to $89.3 billion by 2022, the CBO forecasts.

Most of the deficit increase this year stems from the loss of $70 billion in payroll-tax revenue that would have been allocated to the Social Security Trust Fund, The Hill reports.

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Friday, 17 February 2012 12:28 PM
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