Payroll tax deal passes Congress in rare win for Obama

BBC.COM

The US Congress has approved a short-term renewal of a payroll tax cut, a day after House Republicans caved in to overwhelming pressure on the issue.

The bill extends the tax cut as well as unemployment insurance for two-months.

Lawmakers held voice votes on the deal, requiring only a few members to be present.

A joint conference committee will work on a year-long deal, after the holiday recess. The bill now goes to President Barack Obama to sign into law.The deal keeps in place a tax cut that saves about $1,000 (£638) each year for an average US income, and prevents almost two million unemployed people from losing jobless benefits of about $300 a week.

Senate and House Democrat leaders named their own appointees on Friday to a conference committee tasked with extending the compromise to a full-year version.

On Thursday, Republican House Speaker John Boehner told members of his party about his U-turn in a muted conference call, where they could not ask questions.

A similar call last weekend prompted a revolt from Tea Party-backed opponents of the bipartisan deal, prompting this week's political showdown.

Thursday's about-turn was a rare retreat for Republicans, who since gaining control of the House in 2010's mid-term elections have wrung a string of concessions from the White House.

Conservatives were initially sceptical about extending the payroll tax break, which economists say would aid US economic recovery.But as Republicans demurred over the $120bn (£76bn) cost of the plan, Democrats had accused them of backing tax cuts only for the wealthiest Americans.

Correspondents say Mr Boehner's back-pedalling reflects a realisation in his party that it would have faced blame for an effective tax rise on US workers in a general election year.

After the Senate vote, Democratic Majority Leader Harry Reid told reporters he wanted the new year to be turning point for Congress.

"I hope this Congress has had a had very good learning experience, especially the newer members," Mr Reid said in a press conference. "The American people need this institution to work effectively," he added.