On December 13, 2011, House Republicans passed a $1 trillion omnibus spending bill, H.R. 3630, entitled the Middle Class Tax Relief and Job Creation Act of 2011, to extend Social Security payroll tax cuts and unemployment insurance by a vote of 234-193, with 224 Republicans and 10 Democrats voting yea. On the Senate side, Majority Leader Harry Reid blocked the bill from coming to a vote, in effect holding lawmakers hostage so Democrats can craft a bill that is backed by President Obama. Democrats in the Senate objected to the bill because it includes several Republican priorities that Democrats vehemently oppose. Some Republicans objected to the legislation because Social Security is already underfunded and this tax cut exacerbates the problem. Texas GOP Congressmen voting nay were Joe Barton (TX-6) and Randy Neugebauer (TX-19). Ron Paul (TX-14) did not vote.
In order to get conservative Republicans on board, House leaders added language to the bill that would force the administration to approve the development of the Keystone oil sands pipeline between Alberta and the Gulf Coast, a project that would create much-needed jobs. Also attached to the bill is a provision to prevent a forced transition from incandescent light bulbs and a provision to restrict local government in the District of Columbia from funding abortions.
If Congress fails to act by December 31, employees will begin paying 6.2 percent on the first $110,100 in wages in January rather than 4.2 percent.
Neither party wants to be blamed for letting tax cuts for the middle class expire or for a government shutdown. Congress must approve a version of the spending bill or pass a continuing resolution to fund government.
Another major sticking point between the parties is how to pay for the payroll tax cuts. Republicans want to reduce spending while Democrats support surtax on income exceeding $1 million.