* House, Senate may vote on it this week
* Seen as a victory for Obama and his Democrats
* Frees Republicans of possible election-year problem
By Richard Cowan and Thomas Ferraro
WASHINGTON, Feb 16 A payroll tax cut for
160 million Americans, set to expire at the end of this month,
would be extended through December under a bipartisan deal
announced early on Thursday by U.S. congressional leaders.
The accord would also renew expiring jobless benefits for
millions of others and prevent a pay cut for doctors of elderly
The comprehensive agreement represents a victory for
President Barack Obama and his fellow Democrats in Congress, and
allows Republicans to put behind them a tax debate that
threatened to hurt them in the November elections.
Economists say the tax cut extension and renewal of jobless
benefits should provide a lift to the U.S. economy, certain to
be a key issue in the battle for control of Congress and the
White House in the run-up to Election Day.
"We have reached an agreement and we're moving forward,"
Republican Representative Dave Camp, who headed the negotiating
committee, told reporters shortly after midnight EST on
It was not immediately clear when the House of
Representatives and Senate would vote on the deal, but lawmakers
hoped to do so before they leave Friday for a week-long recess.
While congressional leaders announced a deal, they said a
few undisclosed details had to be resolved before the agreement
could be turned into a final bill. They expressed confidence
this would be done quickly.
Senator Max Baucus, a lead Democratic negotiator, said,
"This is very important to a lot of people: 160 million
Americans are now going to maintain their payroll tax cuts (and)
a lot of folks who lost their jobs through no fault of their own
are going to be receiving unemployment benefits."
Their announcement capped a long day of fits and starts,
political drama and high-level negotiating.
At one point, the deal seemed in jeopardy just hours after
aides said it had been struck by lead negotiators.
Democrats complained that Senate Republicans were suddenly
demanding that a new restriction on physician-owned hospitals
had to be eased to gain their support.
Aides said some Democratic negotiators were also reluctant
to sign off on the deal because of cuts in the pensions of
The overarching issue, however, was the proposed extension
for 10 months of the payroll tax cut set to expire on Feb. 29.
Many Republicans had initially balked at the extension while
others insisted that its cost had to be offset by spending cuts
to prevent an increase in the U.S. deficit.
Their positions drew fire from many fellow Republicans, who
argued that the party had long been for lower taxes and that
blocking a tax-cut extension could rile voters in advance of the
House Speaker John Boehner and fellow Republican leaders
cleared the way for a deal on Monday when they dropped their
demand that there be spending reductions to pay for the tax-cut
The payroll tax was first reduced from 6.2 percent to 4.2
percent in the beginning of 2011 at the request of Obama as part
of his bid to stimulate the economy.
The new deal would continue the 4.2 percent rate until the
end of this year, during which it is projected to put an
additional $1,000 in the pockets of the average American working
Analysts said opinion polls showing public disgust with a
gridlocked Congress may have helped drive lawmakers, many of
whom are up for re-election this year, toward a deal.