Congress Reaches Bipartisan Agreement to Extend Payroll Tax Cut

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U.S. lawmakers announced a bipartisan deal early Thursday that would extend a payroll tax cut for 160 million Americans.

Under the deal, Congress would extend through December a payroll tax cut set to expire at the end of this month. The accord would also renew expiring unemployment benefits for millions of others and prevent pay cuts for doctors of elderly Medicare patients.

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A few undisclosed details still needed to be resolved before the agreement can be turned into a final bill, but congressional leaders expressed confidence that they would be taken care of quickly.

But there was a point in negotiations where the deal seemed in jeopardy, as Democrats complained that Senate Republicans were suddenly demanding the easing of a new restriction on physician-owned hospitals.

Other Democratic negotiations were also reluctant to sign off on the deal because it would cut the pensions of federal workers.

Some Republicans initially rejected the extension outright, while others insisted that its cost be offset by spending cuts. The two factions grew fire from many fellow Republicans, who argued that the party had long been for lower taxes, and that blocking a tax-cut extension would be a politically unwise move in advance of November elections.

House Speaker John Boehner (R-Ohio) and fellow Republican leaders eventually dropped their demand for spending reductions on Monday, clearing the way for a deal.

President Barack Obama first reduced the payroll tax from 6.2 percent to 4.2 percent in the beginning of 2011 as part of his bid to stimulate the economy. The new deal will continue the 4.2 percent rate through the end of this year, during which it is projected to save the average American working family $1,000.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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