House, Senate have deal on payroll tax cut

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WASHINGTON -- Calling quits to a bruising election-year fight, negotiators on Capitol Hill sealed an agreement late last night on legislation to renew a payroll tax cut for 160 million workers and jobless benefits for millions more.

Sen. Max Baucus (D-Mont.) announced the agreement, capping a long day of wrangling over final details of the measure, which is a top priority of President Barack Obama. The announcement paved the way for votes in the House and Senate this week.

The $150-billion measure represents a tactical retreat for Republicans, who were generally unenthusiastic about the legislation but eager to move beyond the issue. With campaign season starting, they don't want Obama and Democrats in Congress to be able to claim the GOP was standing in the way of a middle-class tax cut.

It represented a rare burst of bipartisanship in a bitterly divided Congress.

The legislation would continue a 2 percentage-point cut in the Social Security payroll tax, renew jobless benefits averaging about $300 a week for people languishing for long periods on unemployment rolls, and protect doctors from a huge cut in their Medicare reimbursements.

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The measure carries a price tag of roughly $150 billion over the coming year, partly financed by new auctions of telecommunications spectrum to wireless companies -- an issue that aides said proved to be a final snag in negotiations -- and by requiring newly hired federal workers to contribute more toward their pensions.

The pension provision was watered down from a version sought by House Republicans, and tentatively agreed to by key Democrats, that would have required current federal workers to contribute more to their defined benefit pensions.

Auctions of portions of the communications spectrum to wireless companies would net another $15 billion or so -- even after $7 billion is set aside to construct and run a new public safety network for emergency first responders.

Extending the payroll tax cut and renewing long-term jobless benefits were key planks in Obama's jobs program, which was announced last September but has been largely ignored since. The measures are intended to help the economy by giving people more money to spend, fattening a typical bimonthly paycheck by $40 or so and giving the unemployed critical cash that most of them turn around and spend immediately.

House Speaker John Boehner (R-Ohio) said the legislation would probably be voted on by the end of the week.

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