Obama Declares Victory for Americans as Tax Deal Reached

'Because of this agreement, every working American will keep his or her tax cut -- about $1,000 for the average family,' Obama said. 'That's about $40 in every paycheck.'

Congressional leaders reached a deal Thursday to give 160 million Americans an extended payroll-tax holiday, handing President Obama a year-end political victory over his Republican foes.

The showdown over a payroll-tax-cut extension worth about $40 per pay check to average Americans was the latest fierce showdown for control of power in polarized Washington ahead of Obama's 2012 re-election race.

Obama earlier had fumed at the fact that Republicans and Democrats agreed that passing a payroll-tax cut was necessary, but were unable to agree on the length of the extension.

"Has this place become so dysfunctional that even when people agree with things we can't do it? It doesn't make any sense. Enough is enough," Obama said.

The Democratic-led Senate voted for a two-month extension of the payroll-tax holiday in a compromise at the weekend, but the bill was blocked by the Republican-led House, which wanted a one-year extension.

Announcing the deal, House Speaker John Boehner said he would ask the House to pass by voice vote a new version of the Senate compromise, including amended language designed to make it more palatable to small businesses.

The Senate also will have to take a similar step before the bill is ready for Obama to sign into law.

'Sometimes, It's Hard to do the Right Thing'

In theory, any lawmaker could scuttle the plan to prevent the deal sailing through both chambers, leading to hours of suspense before the two chambers are expected to act on the compromise on Friday.

Critics likely will see it as a climb-down by Boehner, whose Republicans have spent the whole year frustrating Obama's agenda since sweeping to power in the House in mid-term elections in 2010.

"Sometimes, it's hard to do the right thing and sometimes, it's politically difficult to do the right thing," Boehner said.

"[It] may not have been the politically the smartest thing in the world, but let me tell you what. I think our members waged a good fight."

The new compromise also will see Democratic Senate leader Harry Reid appoint negotiators to work on a one-year extension to the payroll-tax break, which was sought by the House.

The deal means the payroll-tax deduction, which is separate from income taxes and funds the U.S. retirement system, will remain at 4.2% instead of rising to 6.2% on Jan. 1.

It also means that 2 million Americans will keep unemployment benefits that were due to expire at the end of the year.

"Because of this agreement, every working American will keep his or her tax cut -- about $1,000 for the average family," Obama said.

"That's about $40 in every paycheck."

"This is good news, just in time for the holidays," Obama said in a written statement, and praised Americans who had flooded the White House website and Twitter with complaints that they would lose their payroll-tax cut.

"I want to thank every American who raised your voice to remind folks in this town what this debate was all about," Obama said.

"It was about you. And today, your voices made all the difference."

House Republicans had been pilloried by Democrats, elements of the conservative media and luminaries from their own side for blocking the bipartisan Senate compromise.

Republican Senate Minority leader Mitch McConnell had weighed in on Thursday, sketching the details of the possible compromise, in an intervention that may have been decisive.

As a complex political chess game unfolded in Washington, Obama had put off plans to head to the surf and sands of Hawaii to join his wife and daughters for their annual end-of-year vacation.

Copyright Agence France-Presse, 2011


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