Leaders in Congress Reach Tentative Deal on Payroll Tax Extension, Unemployment Benefits

Entering the year of a presidential election, the Republican leadership in Congress appears to have let up in their fight against Democrats and the President on a payroll tax cut extension, reportedly on the cusp of finalizing a deal to extend the cuts as well as unemployment benefits for the next ten months.

Congressional leaders of both parties have praised the emerging deal Wednesday to extend the payroll tax cut and extra jobless benefits through 2012. AP reports that the rare, bipartisan consensus reflected a desire by both parties to put the long-running drama over the issue to rest and a shared sense that their tentative agreement was probably the best deal they could get. The pact came together after House Republicans conceded that the roughly $100 billion payroll tax cut would not have to be paid for with spending cuts.

“I do expect, if the agreement comes together like I expect it will, the House should vote this week,” Boehner told reporters Wednesday. House Minority Leader Nancy Pelosi told AP that Democrats were pleased that the package will extend the payroll tax cut and extra jobless benefits and block a 27 percent cut in doctors’ Medicare reimbursements.

POLITICO reports that under the new deal, a 2-percentage point payroll tax cut would be extended until the end of year– and the $100 billion cost would be added to the deficit.

“We were not going to allow the Democrats to continue to play political games and raise taxes on working Americans, and so we made a decision to bring them to the table so the games would stop and we would get this work done,” Boehner said to The Hill.

Senate Finance Committee Chairman Max Baucus, D-Mont., one of the bargainers on the legislation, told AP that there were “just a couple of little wrinkles” left that he believed would be resolved on Wednesday.

“I think a lot of people realize Congress is not enjoying a great reputation,” he told reporters. “Both sides recognized the need to get this done.”

Lawmakers said among the unresolved items were details of the savings to be used to pay for about $50 billion of the roughly $150 billion package.

In December, the House GOP initially opposed a two-month extension of the tax cut and other benefits that were about to lapse, only to retreat under pressure from outside party leaders and conservatives.

“We’ve got to move onto another issue,” Florida Republican Rep. Dennis Ross told the Associated. “I think that’s what the mood is.”

The deal excludes a collection of expiring tax breaks, largely for businesses buying equipment and other corporate expenses that had been sought by some lawmakers of both parties.

Participants told AP that Medicare payments to doctors would be paid for by reducing Medicare reimbursements to hospitals and by cutting about $5 billion from an $8 billion program under Obama’s health care overhaul aimed at battling obesity and smoking.The unemployment benefits would be financed with a collection of savings that include government sales of parts of the broadcast airwaves to wireless companies and from boosting federal workers’ contributions to their pensions.

Republicans abandoned earlier provisions from a House-passed bill that would have required the jobless to pursue a high school equivalency degree to get benefits and let states require recipients to undergo drug testing. GOP leaders also dropped other House-passed language forcing low-income people to have Social Security numbers to get government checks by claiming the children’s tax credit, a move that AP notes was aimed at illegal immigrants and caused a furor among many Hispanics.

The Wall Street Journal notes that Republican leaders are likely to face defections from within their own ranks on the deal, and will depend on Democrat support to pass the measure. The House speaker sidestepped questions Wednesday about the fissures within his own party due to the newest agreement, emphasizing that “we’ve worked all year to cut spending.”

Negotiators are still working out some details, but The Hill reports that House leaders hope to vote on the package by Friday.