WASHINGTON: The US Congress took a first step on Friday toward approving a two-month payroll tax cut extension, setting up another round of partisan fiscal policy warfare in an election year, with the economy barely scratching out a recovery.
The Senate, by a voice vote in a chamber nearly emptied for the holidays, passed a $33 billion measure to keep the payroll tax rate at 4.2 percent until the end of February. It had been slated to increase after Dec. 31 to 6.2 percent.
The Republican-controlled House of Representatives was expected to follow suit later in the morning, though some suspense remained. The House decision will come on a voice vote. If one House member objects, the House will have to return next week for a roll-call vote.
That was seen as an unlikely outcome, with lawmakers keen to draw down the curtain on weeks of partisan deadlock that has only produced another inconclusive truce in a debate over taxes and spending that is set to rage straight through 2012.
The temporary payroll tax fix gives President Barack Obama and the Democrats a political win over Republicans. The 2012 election cycle is about to kick off with the Jan. 3 Iowa Republican presidential caucus, but a long road lies ahead until voters go to polls in November.
House Republicans backed down late on Thursday from their opposition to the two-month extension, clearing the way for Friday's action.
Unemployment benefits that had been set to expire soon were extended as well, while cuts in payments to doctors who treat patients in the government-backed Medicare health insurance program for the elderly were also postponed, under the measures.
An increase in the payroll tax would have hit the wallets of 160 million US workers at a time of high unemployment and deep voter dissatisfaction with the tax system, the shape of the economy and the way Congress conducts itself.
House Speaker John Boehner the top US Republican, yielded to pressure from Democrats and his party and agreed, with minor changes, to allow a vote on the extension bill passed by the Senate last week with bipartisan support.
The two-month deal came after lawmakers were unable to agree on ways to offset the costs of a full-year payroll tax cut extension. The temporary extension legislation was expected to be sent to Obama to sign into law before Dec. 31.
Democratic Representative Chris Van Hollen said on Friday the two parties remained far apart on how to pay for a full-year fix.
"I heard Eric Cantor (the No. 2 Republican in the House) at one point say the parties are really close on the one-year deal. That's just not the case," Van Hollen told MSNBC.
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