Senate Strikes Deal on Payroll Tax Cut – Vote Coming Saturday

A deal has been struck between Senate leadership for a payroll tax cut plan.

The $30-40 billion plan calls for a two-month extension of payroll tax cut and extension of unemployment benefits.

?There is an inclusion of the Keystone XL oil pipeline provision, a major win for Republicans.

The bill is fully paid for without tax hikes. The bill is paid for with fees from Fannie Mae and Freddie Mac. The bill will require the Federal Housing Finance Agency to institute a basis point increase to guarantee fees imposed by Fannie Mae and Freddie Mac on lenders. 

The Senate Democratic and Republican caucuses met tonight to be briefed by thier leaders.

Some Republican senators left their meeting quickly, happy with the inclusion of the Keystone oil pipeline.

The Senate will hold a vote on their payroll plan  at 9 a.m. Saturday.

Leaving the Capitol tonight, Senate Minority Leader Mitch McConnell, R-Ky., said the plan was "well received" among Republicans.

"I'm very optimistic," McConnell said leaving tonight at the plan passing tomorrow in the Senate.

The Senate Democratic caucus broke up after 90 minutes and while most Democrats admitted that there are parts of the proposal that they don't like, it seems that Democrats are confident they have the votes to pass this deal Saturday.

While the Democrats did get the payroll tax cut extension and the unemployment benefits extension, they had to make major concessions on the inclusion of the Keystone XL oil pipeline provision and the fact that the bill does not have any tax increase on millionaires.

"That's the best that we could get," Majority Leader Harry Reid, D-Nev., said tonight.

It's clear from the language out of Senate Democrats tonight that they believe they just bought themselves time and will have to fight the same issue in two months.

"We have a lot of ammunition," Reid said of the looming next round.  "We will not have the threat of a government shutdown in two months."

"The fight is on," Sen. Chuck Schumer, D-N.Y., said. "The leverage (Republicans) always had is always about shutting down the government, or not raising the debt ceiling. But now the fight is on payroll tax which is something where we have strength. People want the payroll tax reduction and if they are going to keep opposing it and opposing it and opposing it, it's going to hurt them."

"We have at least bought 60 days into the New Year and we live to fight another day," said Sen. Dick Durbin, D-Ill.

Also, this is just a Senate deal. If and when the Senate passes this it will still need to be sold and passed in the House.

Both sides in the Senate were pushing for a longer, 11-month, payroll plan, but they could not agree on the way to pay for the bill.

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