In a rare moment of bipartisanship, the House of Representatives on Thursday overwhelmingly voted to repeal a 3 percent withholding rule to government contractors.
The House voted 405-16 to repeal the withholding requirement that the Republican-controlled Congress approved in 2006 and that President George W. Bush signed into law. The rule, which actually was not scheduled to take effect until 2012, would have required governments at all levels to withhold 3 percent of their payments to contracting businesses.
Members of both parties have said the rule would cost the government more than the revenue it was projected to bring in. The non-partisan Congressional Budget Office said repealing the withholding rule would cost the government $11.2 billion over 10 years. Republicans contend, though, that changing healthcare eligibility requirements would save the government about $13 billion – in this case the eligibility requirements pertain to a companion bill that lawmakers also passed 262-157 on Thursday that would scale back the eligibility for Medicaid and other healthcare programs that would have otherwise allowed millions of middle class Americans to join them.
The withholding rule repeal also was a small part of President Barack Obama’s $447 billion American Jobs Act, and contractors supported repealing the provision as a way to give them more certainty for their businesses.
“The impact of this rule will be huge, accounting burdens on governments and potentially harmful cash flow disruptions for suppliers, contractors and subcontractors,” House Majority Leader Eric Cantor (R-Va.) said. “Those are dollars … that could otherwise be used to grow a business or hire more workers.”
“I opposed the enactment of the 3 percent withholding when a Republican Congress and a Republican administration enacted it, because I knew that it would hurt the economic engines of our economy,” Rep. Bill Pascrell (D-N.J.) said. “The repeal of this requirement will free up small businesses’ cash flow, increasing their ability to add jobs and to bid on new projects.”
Now that it has passed the House, it awaits action in the Senate. Senate Republicans introduced a companion bill last week but it failed to overcome a Democratic-led filibuster by three votes. In that case, Democrats were opposed to the $30 billion in discretionary spending cuts that Republicans attached to the plan. Senate Majority Leader Harry Reid (D-Nev.) said he supported the repeal but that Senate Minority Leader Mitch McConnell (R-Ky.) and his Republican colleagues were using the cuts as a “stunt.”
Still, Senate leaders are working on a compromise and McConnell said on Thursday he would call for a vote next week on a repeal measure that did not contain any partisan language.
“The president asked us to come together and pass pieces of his bill,” McConnell said in a statement. “Here’s one that all 100 senators should agree on. Let’s vote on it, and prove the skeptics wrong by acting in a bipartisan fashion on something that the job creators in this country actually want.”
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