Payroll Tax Cut | featured news

Consumers will have to dig deeper into their pockets next year to pay for costlier healthcare, more expensive grocery bills and higher taxes, an extra drag on the country's already slow-moving economy.

Relishing a political victory, President Barack Obama said Tuesday that Congress "did the right thing" by extending payroll tax cuts for millions of Americans. He urged lawmakers to push forward on more measures, from assistance to struggling homeowners to increased taxes on the wealthy, saying the looming election was no excuse for inaction in Washington.

With members of both parties expressing distaste at some of the particulars, Congress on Friday voted to extend the payroll tax cut and jobless benefits and sent the bill to President Obama.

Despite discomfort in the Republican ranks, House and Senate negotiators reached a deal in principle early Thursday to extend a payroll tax break, continue unemployment benefits and ensure that Medicare doctors do not get a pay cut this year.

House-Senate talks on renewing a payroll tax cut that delivers about $20 a week to the average worker yielded a tentative agreement Tuesday, with lawmakers planning to unveil the pact Wednesday and sending the measure to President Barack Obama as early as this week.

In a sharp turnaround, House Republican leaders Monday dropped a key demand that the cost of extending the payroll tax cut be offset by spending cuts elsewhere in the budget.

Barack Obama is calling on Congress to extend a payroll tax cut for the remainder of the year as a deadline nears for Congress to act or see taxes go up for millions of working Americans.

President Obama is still reaping the dividends from this month's fight with the House GOP on extending the payroll tax. Obama's approval ratings are higher than his disapproval ratings for the first time since July, according to the latest Gallup Poll. About 47% of Americans approve of the way he is doing his job, while 45% disapprove of his performance. The three-day tracking poll was conducted Dec. 21-23.

House of Representatives Republican Speaker John Boehner has agreed to accept a bipartisan deal to extend a payroll tax cut, in an abrupt U-turn. He had refused a vote on the bill, which was passed by Republicans and Democrats in the Senate last Saturday. Correspondents say the move amounts to a cave-in by House Republicans, and victory for President Barack Obama.

With most lawmakers gone for the holidays, President Obama took full advantage of the empty stage, appearing with everyday Americans to make the case that House Republicans need to relent and pass a payroll tax cut extension that would mean an extra $1,000 a year to a typical family.