House Republicans agree to payroll tax cut

December 22, 2011

The Associated Press

(File/AP)

House Republican leaders in an abrupt switch Thursday agreed to a two-month extension of a payroll tax cut and federal unemployment benefits, Republican aides said.

The move reflects a bowing to demands by the Democrat-led Senate and President Barack Obama and appears to all but assure 160 million workers are not hit by a 2 percentage point increase in the payroll tax on Jan. 1.

An increase would have infuriated voters ahead of next November's presidential and congressional elections and might have slowed the weak U.S.economic recovery.

The decision also would renew jobless benefits for almost 2 million people without jobs for more than six months and spare doctors from a big cut in government payments for care of the elderly. House Republicans were to hold a telephone conference call on the developments later Thursday.

House Republicans balked at the bipartisan Senate bill earlier this week, and their leaders, as recently as Thursday morning, had insisted that the Senate begin talks on a one-year measure passed by the House last week. The Senate passed a 2-month extension on Saturday.

The decision came swiftly after the top Republican in the Senate, Minority Leader Mitch McConnell, urged the House to accept a short-term measure.