Congress Approves Two-Month Payroll Tax Cut Extension

Political fallout from the standoff, resulting from a possible Jan. 1 increase in payroll taxes and a cutoff of long-term unemployment benefits, was taking its toll on the party. Conservative Republicans had insisted that the two-month bipartisan deal, hammered out by negotiators in the Senate and approved 89-10 earlier in the week, was unacceptable.

Instead, conservatives were determined to have a one-year deal, with more substantial cuts, or none at all. As Democrats pounced on the news that taxes would rise and benefits fall during a struggling economy, there was mounting dissent even within the Republican party, with Sen. Scott Brown (R-Mass.) calling the rejection “irresponsible and wrong.”

The new two-month extension is basically the same as the one originally rejected on Tuesday, with minor adjustments to make it easier for small businesses to cope with the tax changes and to keep employers from manipulating employees’ pay if the tax cut extension fails to extend past two months.

The deal was arrived at with the understanding that Senate Majority Leader Harry Reid, D-Nev., will name negotiators for a committee that will work on a one-year deal, together with House negotiators to be named by Boehner. Reid had previously refused to name members to such a committee, saying that the Senate had already approved a bill and the House needed to do so as well, with discussion about a longer extension to occur during the two months of the already-approved extension.