Senate spares feds in payroll tax bill

The debate over extending the payroll tax holiday is not over yet, but lawmakers granted federal employees a reprieve of sorts during the weekend.

The Senate did not include an extended federal pay freeze or provisions increasing the amount government employees contribute to their pensions in its payroll tax cut legislation. The Senate passed its version Saturday.

The House included those measures in its legislation, and is expected to vote down the Senate bill Monday evening. Speaker John Boehner, R-Ohio, said he thinks the two chambers will settle their differences in conference committee. "I don't believe the difference between the House and Senate are too great," he said during a briefing Monday morning.

The biggest sticking point between the two chambers is over the length of the payroll tax cut extension. The Senate approved a two-month extension of the holiday; House Republicans are pushing for a yearlong extension. Boehner said a two-month reprieve "creates uncertainty and causes problems for people who are trying to create jobs in the private sector."

Boehner did not address the issue of further reductions to federal employees' pay and benefits. He did, however, say that President Obama agreed with "90 percent" of the spending offsets included in the House version of the payroll tax cut legislation, which included an additional one-year pay freeze on federal workers and members of Congress and raised the amount government employees must contribute to their retirement benefits.

Washington-area lawmakers and a handful of other Democrats have criticized plans to reduce federal employees' compensation to help pay for the tax cut. The White House, however, has been mum on the issue.

Congress this past weekend also voted to fund the government through the end of fiscal 2012, averting the threat of any more shutdowns until next fall. President Obama signed a short-term continuing resolution on Saturday to keep the government open through Dec. 23 to allow time for the full package to get to his desk. Obama is expected to sign into law this week the congressionally approved omnibus funding the government through fiscal 2012.

As part of that omnibus package, the U.S. Postal Service received another deferral on a multibillion-dollar payment to prefund retirees' health benefits. The new deadline for the $5.5 billion mandatory payment is Aug. 1, 2012.