Congressional leaders reached a deal Thursday night to get around the legislative logjam that had been threatening another government shutdown, though they continued to work on a bipartisan deal to extend this year’s payroll-tax cut and unemployment benefits.
The deal would have both the House and Senate pass Friday a $1 trillion bill to fund the government, with both parties backing off on provisions in the spending bill the other had declared unacceptable.
“The House and Senate have reached a final agreement to move forward on the final fiscal year 2012 appropriations legislation. I am hopeful that the House and Senate can pass this bill tomorrow to prevent a government shutdown … . It is good to see that responsible leadership and good governance can triumph,” said Rep. Harold Rogers, Kentucky Republican and chairman of the House Appropriations Committee.
The conference report was expected to be filed in the House late Thursday night.
On the other track, Senate Majority Leader Harry Reid, Nevada Democrat, said he remained optimistic that the payroll-tax cut and jobless benefits — two linchpins of President Obama’s jobs agenda — could be extended for a whole year, but said negotiators were working on a “Plan B” to extend them for two months and prevent cuts to Medicare reimbursements for doctors.
“We’re still working on the long-term” bill, Mr. Reid told reporters upon leaving the Capitol on Thursday night. “We’ll only do [the two-month extension] if what we’re working on doesn’t work out.”
Earlier in the day, Senate Minority Leader Mitch McConnell of Kentucky, said he and Mr. Reid had been in “useful discussions about how to wrap the session up.”
A day earlier, the two Senate leaders sparred on the chamber floor, as each tried to outmaneuver the other regarding a standoff over which measure — the payroll-tax extension or the funding measure — to bring up first.
The White House played down news that its plan to pay for the payroll-tax cut extension — through a surtax on millionaires — was no longer under consideration.
The president for months had been calling on Congress to lean on the wealthiest Americans to finance the payroll-tax extension with a 1.9 percent surtax. All along, the Republicans had said the proposal was dead in the water.
Late Wednesday Democrats capitulated on the issue, abandoning their demand that the millionaire surtax pay for the payroll-tax cuts.
Afterward, the White House said paying for the payroll-tax cut was never its top priority. Instead, Mr. Carney said, the president’s main focus for weeks has been ensuring that Congress pass the extension.
“The president’s priority has not been how it’s paid for or raising taxes. It’s been lowering taxes for the vast majority of Americans,” Mr. Carney said Thursday afternoon.
House Speaker John A. Boehner, Ohio Republican, when asked Thursday if he would give anything up in return for Democrats dropping the millionaire surtax, dismissed the move as a meaningless gesture, saying it wasn’t a real concession because “they never had the votes.”
“I appreciate the fact they gave up on their millionaire surtax, but they didn’t give anything up, because they never had it,” he said.
The payroll tax is 4.2 percent this year, but reverts to its usual 6.2 percent on Jan. 1 without congressional action. Both parties have said they want to extend the tax break another year, but are divided over how to pay for it.
Republicans have proposed paying for the tax break by freezing federal workers’ salaries and slowing parts of the Democrats’ health care law.
Mr. Obama has vowed to veto that bill, saying the salary freeze would cut spending too deeply.
The parties also are at odds with GOP insistence that the payroll-tax bill include a provision to force the White House to make a decision on the Keystone XL pipeline, which would carry oil from western Canada to the U.S. Gulf Coast.
The spending-bill impasse broke when Republicans agreed not to block Mr. Obama’s plan to loosen restrictions on personal trade and travel with Cuba, though Republicans kept in a provision Democrats had denounced that would prevent an Obama administration energy-efficiency rule on light bulbs. Democrats also acceded to a ban on abortion funding by the District of Columbia’s government.
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