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Congressional Leaders Announce Payroll Tax Cut Deal, as Boehner Gets Behind Two-Month Stopgap

Congressional leaders announced Thursday that they've struck a deal to ensure the payroll tax rate does not rise at the beginning of next year, potentially ending a stalemate that had put House Speaker John Boehner in a politically uncomfortable position. 

Following a day of political grandstanding by members of both parties, as well as private talks in pursuit of an agreement, Boehner said at a news conference late Thursday that the House plans to vote on a new version of the Senate-passed bill -- which would extend the payroll tax cut for another two months -- despite earlier opposing a short-term extension.

In exchange, the Senate will appoint negotiators who will meet with House lawmakers to next hammer out an extension of the tax cut for the rest of 2012. 

The deal still has to clear both chambers, and rank-and-file Republicans already are expressing concern about the terms Boehner outlined. But the agreement was modeled after a solution Senate GOP Leader Mitch McConnell proposed earlier Thursday. 

McConnell's statement, as well as a very public campaign by the White House to lambaste House Republicans for holding up a deal, had put pressure on Boehner to find a way out of the impasse, and fast. Without a deal, the payroll tax rate is set to rise from 4.2 percent to 6.2 percent on Jan. 1, which would mean about $40 less a paycheck for a family making $50,000. 

"On Jan. 1, no American worker will see an increase in their taxes," Boehner assured Thursday. "I think this agreement will help our economy." 

The deal is a turnaround for Boehner, who until Thursday was abiding by rank-and-file wishes to reject the Senate's two-month package and instead demand the Senate work out a yearlong package before Jan. 1. 

Boehner conceded Thursday that this position "may not have been politically the smartest thing in the world." 

The speaker still has to keep control of a restive caucus in order to deliver on Thursday's agreement. Boehner said the goal is for both chambers to approve the final package by Christmas. And he wants lawmakers to approve it by "unanimous consent" -- meaning leadership would have to pre-clear the deal with all members to ensure there are no objections, so most lawmakers wouldn't have to return to Washington for a regular roll-call vote. 

However, early reaction from rank-and-file Republicans reflected dissension in the ranks once again. One Republican member told Fox News, "I'm thinking of objecting myself. We were hung out by leadership."

Another member who was on a brief Republican conference call Thursday predicted the deal Boehner struck could cause problems for the speaker. "He may have a hard time keeping his speakership after this," the lawmaker said. 

Still another lawmaker said Republican members "never would have gone along" with the deal.

Boehner said Thursday that if he has to, he "absolutely" will call members back to Washington for a vote. But he made clear that he supports his caucus' intentions, even if the politics of the debate caused problems. He praised House GOP lawmakers for waging a "good fight," complaining that short-term "gimmicks" like the Senate-passed bill feed "uncertainty" in the economy. 

"Doing the right thing for the right reasons is always the right thing to do," Boehner said. 

Democrats will surely count this as a victory, presuming the agreement plays out according to plan. 

Senate Democratic Leader Harry Reid said in a written statement that he was "grateful that the voices of reason have prevailed" and that Boehner agreed to take up the Senate bill. 

President Obama also put out a statement welcoming the agreement. "This is good news, just in time for the holidays," he said. "This is real money that will make a real difference in people's lives."

Until now, House Republicans have refused to approved the stop-gap measure passed by the Senate that would have extended the payroll tax cut for another two months. Republicans argue a short-term extension is bad policy, but Democrats, including Obama, have said it is the only way to ensure taxes don't increase on Jan. 1, while the two sides negotiate a longer deal.

Sources tell Fox News that the plan is for the House to originate a new payroll tax bill as early as Friday. 

The tradeoff from Democrats in the Senate is that Reid would appoint conferees so they could have a genuine conference committee between the House and Senate to negotiate differences for a yearlong package. The Republicans' provision calling for a decision from Obama on the controversial Keystone pipeline project would remain in the bill.

In addition, the pact would have what was described to Fox News as some "wonky provisions" to help accountants and others who run payrolls get more certainty on the tax code.

The Senate would have to approve the House bill as well. Then, the conference committee would meet in early January to work on deal to extend the payroll tax cut for a full year.

If all goes according to plan, neither House nor Senate would not have to bring everyone back, since this could be addressed on the floors of the House and Senate with skeleton staff. 

Fox News' Chad Pergram contributed to this report.