Senate reaches agreement to extend payroll tax cut for two months
Senate leaders reached an agreement “in principle” Friday to extend the payroll tax cut for two months — averting a New Year’s tax increase for millions of workers. But the agreement will require the administration to decide quickly whether to allow construction of a controversial transcontinental oil pipeline.
President Obama had demanded that Congress extend the tax holiday, but Republicans had refused to go along unless the White House agreed to an accelerated decision on the pipeline.
Any Senate deal would need approval from the House, which would likely not take up the package until next week. But the inclusion of the controversial pipeline was intended to satisfy House Republicans who had been objecting to a short-term fix.
The deal came Friday as the House also approved a massive spending measure that would stave off the threat of a government shutdown through next September, and the Senate prepared to sign off on the funding measure as early as Saturday.
Under the separate Senate agreement on the payroll tax, the rate paid by 160 million workers would remain at 4.2 percent through February, rather than reverting to 6.2 percent on Jan. 1.
Benefits for the long-term unemployed would also be extended for two months and scheduled cuts to Medicare reimbursement rates for doctors would also be postponed.