POLITICS

Payroll tax cut approved by Congress

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WASHINGTON (AP) - Congress on Friday approved a two-month renewal of payroll tax cuts for 160 million workers and unemployment benefits for millions, handing President Barack Obama a convincing victory for his jobs agenda.

(Photo: Flickr/Johan Ohrling)

Back-to-back voice vote approvals of the measure by the Senate and House capped a retreat by House Republicans who had insisted that a full-year bill was the only way to prevent an immediate tax increase on Jan. 1.

Obama quickly signed the legislation, declaring it was "some good news just in the nick of time for the holidays."

But he added that serious and difficult work lay ahead for Congress and the administration after the break for Christmas and New Year's.

The measure passed despite lingering grumbling from tea party Republicans.

It buys time for negotiations early next year on how to finance a year-long extension of the 2 percentage point Social Security payroll tax cut.

Just 24 hours earlier, House leaders had insisted the only way to prevent that tax hike and a phase-out of jobless benefits for people out of work for more than six months was to pass a full-year renewal.

Friday's version of the bill would put off until January a battle over finding almost $200 billion in spending cuts and new fees to finance the 2-point Social Security tax cut, extend jobless benefits averaging around $300 a week and prevent doctors from absorbing a big cut in Medicare payments through 2012.

Those goals had been embraced by virtually every lawmaker in the House and Senate but had been derailed in a quarrel over demands by House Republicans for immediate negotiations on a long-term extension bill. Senate leaders of both parties had tried to barter such an agreement among themselves a week ago but failed, instead agreeing upon a 60-day measure to buy time for talks next year.

Thursday's decision by House Speaker John Boehner, R-Ohio, to cave in to the Senate came after days of criticism from Obama and Democrats. But perhaps more tellingly, GOP stalwarts including strategist Karl Rove and the Wall Street Journal editorial board warned that if the tax cuts were allowed to expire, Republicans would take a political beating that would harm efforts to unseat Obama next year.

House GOP arguments about the legislative process and what the "uncertainty" of a two-month extension would mean for businesses were unpersuasive, and Obama took the offensive.

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