Congress reached an agreement late Wednesday to extend the temporary payroll tax cut and long-term unemployment benefits for an additional 10 months as part of a $150 billion legislative compromise. Lawmakers are likely to pass the bill and send it to President Obama by the end of the week.
Sen. Max Baucus, D-Mont., announced the deal after a day of wrangling over the final details of the measure.
The compromise came together after House GOP leaders on Monday backed down from a long-standing position that the tax cut be paid for with commensurate spending cuts. "We made a decision to bring them to the table so that the games would stop, and we would get this work done," said House Speaker John Boehner, R-Ohio.
The concession allowed House and Senate negotiators to agree on how to pay for the less costly pieces of the package -- about $50billion combined -- that include unemployment insurance and the Medicare "doc fix," which heads off a scheduled drop in payments to doctors who treat seniors.
The extension will maintain the current cut in the payroll tax rate from 6.2% to 4.2% through the end of the year, which translates to about $1,000 for the average family.
Long-term unemployment benefits will be extended as well through 2012, but Republicans won concessions to gradually reduce the maximum number of weeks for recipients and inclusion of a provision that would authorize states to drug-test unemployment beneficiaries.
The unemployment extension and "doc fix" will be paid for by a combination of offsets that include changes to the pension system for federal workers, sales of federally owned wireless spectrum and Medicare changes that do not affect seniors' benefits.
The deal's lead negotiators were the chairmen of the tax writing committees in the House and Senate: Rep. Dave Camp, R-Mich., and Baucus.
Republicans backed down from their initial payroll tax position for the sake of a resolution ahead of the Feb. 29 deadline. A showdown in December resulted in considerable political turmoil when Republicans initially opposed a short-term payroll tax cut extension at the height of the holidays.
GOP leaders were keen to wrap up talks, partly from concern that Obama would take advantage of the President's Day week-long break to criticize Congress for leaving town without resolving the payroll tax dispute, which affects 160million Americans.
At an event Wednesday in Milwaukee, Obama said the package would aid the U.S. economy.
