House leaders optimistic on emerging payroll tax cut deal, details being worked out

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Congress strikes deal extending payroll tax cuts

Plan would also extend jobless benefits

WASHINGTON – Congressional leaders of both parties praised an emerging deal Wednesday to extend a payroll tax cut and extra jobless benefits through 2012, but cautioned that bargainers still had to nail down final details.

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," House Speaker John Boehner, R-Ohio, told reporters.

House Minority Leader Nancy Pelosi, D-Calif., said 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. Without action, the tax cut, added unemployment benefits and current rate of Medicare benefits would otherwise expire March 1.

"We're way down the road from where we were just a few days ago," she said in a brief interview.

Senate Finance Committee Chairman Max Baucus, D-Mont., one of the bargainers on the legislation, said 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.

Once finalized, the measure would be an election-year victory for President Barack Obama, who made the payroll tax cut a keystone of his largely ignored jobs creation plan in September.

On Tuesday, House Republicans emerging from a closed-door meeting said reaction to the package was generally positive, with some saying it reflected a desire to avoid spending months debating an issue that cost them dearly last year.

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," said Rep. Dennis Ross, R-Fla. "I think that's what the mood is."

Republicans were determined that Obama not be able to claim that the GOP was standing in the way of a middle-class tax cut. They would rather spend the months leading up to the November presidential and congressional elections focused on GOP themes of opposing tax increases, higher spending and Obama administration regulations that they say stifle job creation.

The tentative compromise would extend through December the current 2 percentage-point cut in the usual 6.2 percent Social Security payroll tax deducted from workers' paychecks. That reduction, which saves $1,000 a year for families earning $50,000, would affect 160 million workers and would otherwise expire on March 1.

Excluded, aides said, was 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 said the 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.

In private, some Democrats called it a victory, pointing to the payroll tax cut and unemployment benefit extensions while heading off the GOP's earlier demand that the entire measure be financed with spending cuts and other savings. Others complained that the jobless benefit extensions were not generous enough.

Republicans claimed victory, too, noting their rejection of early Democratic efforts to pay for the payroll tax cut by boosting taxes on millionaires, and with jobless extensions that would be less than the 99 weeks under current law that Democrats wanted to renew.

Aides said the current 99-week maximum would fall gradually to 73 weeks by late summer in states with the worst unemployment, though a GOP aide said most states' ceiling would be 63 weeks. Republicans had wanted to cut the maximum to 59 weeks.

Republicans abandoned 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.

States would be able to test applicants who lost their job because they failed a drug test or are seeking a job that requires one.

They 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 was aimed at illegal immigrants and caused a furor among many Hispanics.

Early Tuesday, Obama tried turning up the heat on Republicans to strike a deal.

"Just pass this middle-class tax cut. Pass the extension of unemployment insurance," he said at a White House appearance. "Do it before it's too late and I will sign it right away."