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Negotiators Reach Deal on Extending Payroll Tax Cut

Updated: 1:02 a.m.

House and Senate negotiators announced late Wednesday evening a sweeping deal to extend a payroll tax cut, jobless benefits and Medicare doctor payments, overcoming several last-minute obstacles that appeared to imperil the bipartisan agreement.

House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Finance Chairman Max Baucus (D-Mont.), the two top lawmakers on the panel tasked with finding agreement, announced the deal just before 1 a.m., indicating that Congress would send a bill to President Barack Obama’s desk by week’s end.

“It’s very good for the country. We have an agreement,” Baucus said. “We have agreements, and I’m totally convinced and assured that we’ve talked to conferees and there will be a majority of the conferees that will sign it.”

The leaders were scant on details coming out of a meeting with other conferees that lasted more than an hour, however. Camp said there are some “technical issues” that “continue to be worked on,” and conferees have not yet signed the report.

“My job is to bring this over the finish line, and I’m confident that we can get there,” Camp said.

Late-night meetings and proclamations of “good” news topped a roller coaster of a day in which a deal seemed imminent in the early afternoon and then on the brink by late evening. An unpopular offset in the original framework of the payroll conference deal cut into federal worker pensions, a move especially maligned by Democrats from Maryland and Virginia, home to many federal employees.

House Minority Whip Steny Hoyer (D-Md.) and payroll tax conferees Rep. Chris Van Hollen (D-Md.) and Sen. Benjamin Cardin (D-Md.) worked late into the evening Wednesday to replace the offset. A source close to the talks indicated that the compromise position requires new federal employees to pay more into their pensions, while older employees are grandfathered in under current law.

Of all the Democrats engaged on the issue, Cardin had been in the toughest spot of all. In order to approve the conference report, the legislation needed the support of a majority of Senate and a majority of House conferees. When it became clear no Senate Republicans would sign off on the deal, leaders needed all four Senate Democrats, including Cardin, to back the compromise package. Extending the tax break has been a top priority for the Obama administration, which had included the cut in its jobs package last summer.

The fact that the deal had not been posted online by Thursday means House Republicans would have to renege on their Pledge to America in order to hold a Friday vote. The pledge promises each bill will be posted for three calendar days before a floor vote.

An aide with knowledge of the talks also said that certain Medicare tax extenders were included in the agreement as well.

Although lawmakers and aides were relieved to announce a deal, approval from the conference committee is just a first step. The legislation still faces a relatively bumpy path through the House, even though most sources believed Wednesday that the 10-month package will become law.

The federal pension offsets, though more palatable as amended, and reforms to jobless benefits have turned off some Democrats. And Republicans lamented that a $100 billion payroll tax cut extension would not be offset. It seemed that as a deal inched closer, it revealed more than ever the fundamental divides between the parties and the displeasure each side felt in feeling that its negotiators gave up too much.

“A lot of us are concerned” about taking money from federal worker pensions, Assistant Minority Leader James Clyburn (D-S.C.) said. He added that such a provision could keep him from voting for the bill.

Even Senate leaders conceded that the agreement, particularly the compromises made on jobless benefits, is far from ideal.

When asked whether the agreement is good, Senate Majority Whip Dick Durbin (D-Ill.) said, “No.”

“We started with a position that says we won’t pay for [unemployment insurance] — we’re not going to prevail on that,” the Illinois Democrat added. “Secondly, we want to protect those, particularly in high unemployment states, so there’s some strong feelings among some of our Members.”

The agreement would reduce the number of weeks unemployed workers could receive benefits in most states, but the number of weeks varies depending on the jurisdiction.

Durbin acknowledged that it is much easier for Senate leaders to get their Members in line than it is for House Republicans.

“What [Senate Majority Leader Harry Reid (D-Nev.)] said to me this morning was, ‘I think we have an agreement; I know what’s in it.’ And now the question is, ‘What can [Speaker] John Boehner pass?’ And as soon as he puts something on the floor and passes it, I’m ready to sit down with our people and say, ‘Well this is it,’” Durbin said. Because the House GOP nearly scuttled December’s short-term deal on the payroll tax cut extension that was negotiated between Reid and Minority Leader Mitch McConnell (R-Ky.), Durbin said the Senate would not likely again try to initiate legislation.

“I think McConnell’s gun-shy. He got burned,” Durbin said.

Sen. Debbie Stabenow (D-Mich.), a member of the leadership team who represents an economically depressed state, expressed concern about the proposed unemployment insurance reform, although she wanted to reserve judgment until she reviewed the final agreement.

“Obviously, I’m concerned with any reduction in weeks when we have so many people looking for work for so long, but I have to look at all the details,” Stabenow said.

Across the aisle and dome, some Republicans in the House already have vowed to vote against the measure, and as more details emerged about the bill, more were joining the chorus.

Rep. Jack Kingston, who said he was leaning toward voting against the bill on Wednesday afternoon, said he thinks the measure will pass.

“I suspect we’ll get there,” the Georgia Republican said. “Once you have a conference report … you can afford to lose 60 people on either side.”

Senate Democrats had been waiting to see whether House Republicans could clear the package before responding to the agreement or providing Members of their own caucus with details of the deal.

Top Democrats did discuss it during their weekly chairmen’s lunch, and many aides expect at least some backlash during an afternoon meeting of the full caucus today. They also are concerned that if an agreement is reached, Sen. Rand Paul (R-Ky.) could block any unanimous consent agreement that would be needed to vote on the package by Friday, the Senate Democratic aide said.

Paul has delayed consideration of the Senate transportation bill and the confirmation of a judge in an effort to get a vote on his proposal to cut off aid to Egypt until Americans being held there are released. Paul wants to use the roughly $1.3 billion a year the United States provides to Egypt in aid as an incentive for the Egyptian authorities to release the Americans.

Humberto Sanchez contributed to this report.

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