Congress agrees to payroll tax deal; Obama will sign it

Congress on Friday swiftly approved a two-month extension of the payroll tax holiday, ending for the moment a contentious three-month battle over one of President Obama’s top legislative priorities.

In a near-empty Capitol building, the Senate and then the House signed off on a compromise plan by unanimous consent, a procedural move that allowed the legislation to move to the president’s desk without requiring most lawmakers to return to Washington.

In addition to keeping Social Security payroll taxes at current levels for an additional two months, the deal struck by party leaders Thursday would maintain unemployment insurance for people who have been jobless for an extended period and would block a cut in the payments doctors receive for treating Medicare patients.

After Jan. 1, congressional negotiators would meet to decide how to extend the provisions for the rest of 2012.

Obama is expected to quickly sign the accord, allowing him to join his family in Hawaii for his traditional holiday retreat in his home state.

Friday’s action came after House Speaker John A. Boehner backed off his insistence that Congress enact only a full-year extension of the tax break.

Republican rank-and-file members opposed the temporary accord that had been overwhelmingly approved in the Senate last weekend. But the Ohio Republican had found himself with few allies outside his chamber as the Democrats and the White House appeared to have the upper hand, arguing that the House was risking a $40-a-paycheck tax hike for average workers in the New Year.

“It’s not always easy to do the right thing,” Boehner said Thursday night.

After reaching an accord with Senate Majority Leader Harry Reid on Thursday, Boehner took an unusually firm approach with the rank and file during a conference call Thursday evening, according to those familiar with the situation.

One freshman Republican expressed the disappointment and frustration that some lawmakers feel with the deal.

“The House has caved yet again to the president and Senate Democrats,” said Rep. Tim Huelskamp of Kansas. “The Republican majority would not exist if not for the conservative freshman class of 2010. We were sent here with a clear set of instructions from the American people to put an end to business as usual in Washington, yet here we are being asked to sign off on yet another gimmick. No wonder the American people are left with a bad taste in their mouths when it comes to Congress.”

After a holiday break, appointed conferees will begin discussing ways to fund a full-year extension of the tax holiday. The debate over how to achieve just that led to the impasse that resulted in the temporary measure; Democrats wanted a surtax on millionaires, while Republicans favored steep spending cuts.

Speaking after the Senate action, Reid expressed his hope that the end of this year would also mean the end of the kind of brinkmanship seen on major budget fights throughout 2011.

“I hope this Congress has had a very good learning experience,” the Nevada Democrat told reporters. “Everything we do around here does not have to end up in a fight.”

Lisa Mascaro contributed to this report.