Congressional leaders sign off on payroll-tax deal

Congressional leaders signed off on a final deal Thursday to extend the payroll-tax cuts and enhanced unemployment benefits through the rest of this year, setting up fights in both chambers as they struggle to convince rank-and-file lawmakers in both parties to support an agreement few like.

The deal was struck between Senate Democrats and House Republicans, who paved the way earlier this week when they dropped their insistence that the tax cuts’ revenue be offset with spending cuts elsewhere.

Instead, Thursday’s agreement means the deficit this year will be $101 billion deeper, the Congressional Budget Office said.

President Obama praised the negotiators for their deal and urged the full Congress to pass it.

“Leaders of both parties have done the right thing for our families and for our economy by reaching an agreement that will prevent a tax hike on 160 million working Americans,” he said.

House Speaker John A. Boehner, Ohio Republican, called it a “fair agreement and one that I support.”

But conspicuously absent from the agreement were Senate Republicans, who withheld their signatures from the final report. And with some Senate Democrats also not on board, the deal’s fate is particularly tenuous in the upper chamber ahead of a vote expected Friday or Saturday.

Senate Democratic leaders pressed Senate Minority Leader Mitch McConnell of Kentucky to rally his fellow Republicans to push the bill over the finish line.

“It goes without saying that this deal will not pass unless Leader McConnell gives it his blessing,” said Sen. Charles E. Schumer, New York Democrat. “Even if he won’t vote for it himself, he needs to allow enough of his members to support it so it can pass.”

In the House, Minority Leader Nancy Pelosi said, “I don’t see a scenario where our members will vote against it.” But the No. 2 Democrat, Rep. Steny H. Hoyer of Maryland, said he’ll oppose it because it requires future federal employees to contribute more toward their retirements.

And lawmakers on both sides of the aisle blasted the deeper deficits.

“We’re saying that tax cuts somehow don’t have to be paid for,” said Sen. Mark R. Warner, Virginia Democrat. “We’re advancing a policy that I believe will come back to haunt us later this year when the Bush tax cuts expire.”

Negotiators were racing to complete the agreement this week because Congress is scheduled to be on vacation next week.

The current payroll-tax cuts, unemployment benefits and full payments to doctors who treat Medicare patients all expire at the end of this month.

The final sticking point, solved Thursday, was over the proposal to require federal workers to contribute an additional 1.5 percent of their pay to their pensions — with the money going to pay for the enhanced unemployment benefits.

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