Senate reaches payroll tax agreement

Dec. 16, 2011 at 9:29 PM
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WASHINGTON, Dec. 16 (UPI) -- U.S. Senate leaders said Friday they have agreed on a payroll tax holiday and jobless benefit extension, but only for the first two months of the coming year.

Citing GOP sources, The Hill reported House Speaker John Boehner, R-Ohio, would not sign off on the agreement until he has checked with Republican House members. The White House issued a statement saying the agreement "meets (the) test" President Barack Obama called for when he said Congress should not break for the holidays without agreeing on extending the payroll tax cut.

"This is an important step toward enacting a key provision of the president's American Jobs Act and a significant victory for the American people and the economy, because as independent analysts have said, failing to extend this tax cut would have had a damaging effect on our recovery and job growth," White House spokesman Dan Pfeiffer said in the statement.

The deal announced in the Senate includes a provision previously passed by the House requiring the administration to reach a decision on approving construction of the Keystone XL oil sands pipeline. However, Democratic legislative aides said agreeing to the concession likely means the project will not be approved, because the White House has said it would not be rushed in approving the project, The Hill said.

The Senate is scheduled to vote Saturday on the tentative agreement, which was announced hours after the House approved a $1 trillion compromise spending bill to keep the government funded for the rest of the fiscal year. The measure passed on a 296-121 vote and now goes to the Senate, where approval is also expected.

The action will prevent a partial government shutdown that would have occurred when current authorization for government funding ends at midnight Friday, CNN reported.

Senate Majority Leader Harry Reid, D-Nev., said under a White House ruling "if one house passes a spending bill .... and there's a presumption it will pass in the other body, the time is extended for 24 hours."

"So everyone doesn't have to worry about the government closing tonight," Reid said Friday.

The 11th-hour compromise was finalized after Democrats won last-minute concessions, including an agreement to drop a GOP proposal to overturn an Obama administration policy by imposing stricter limits on Americans' ability to travel and send money to relatives in Cuba. The Republican concession left the Obama policy in place. Since Obama relaxed the restrictions in 2009, Cuba has seen a surge in visitors and remittances.

The Keystone XL pipeline system -- to transport synthetic crude oil and diluted asphalt, tar and other road- and roof-surfacing materials to the Gulf Coast from Alberta, Canada -- is on hold until 2013 as the State Department considers environmental objections.

Obama threatened to veto the GOP bill that passed the House Tuesday because it includes those provisions. House Speaker John Boehner, R-Ohio, said Thursday he would not drop the Keystone pipeline language but also declined to say it was a non-negotiable demand.

Talks on the payroll tax holiday resumed Thursday after a four-day standoff when Democrats dropped their demand the tax cut be paid for with a 1.9-percent surtax on gross incomes topping $1 million a year. Democrats were considering a plan to find savings in other ways, including raising fees Fannie Mae and Freddie Mac collect from mortgage lenders, selling parts of the wireless spectrum controlled by the government and ending a tax break on the sale of corporate jets, The Washington Post said.

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