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Congress approaches payroll tax cut deal

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WASHINGTON — Calling quits to a bruising election-year fight, negotiators on Capitol Hill sealed an agreement late Wednesday on legislation to renew a payroll tax cut for 160 million workers and jobless benefits for millions more

Sen. Max Baucus, D-Mont., announced the agreement, capping a long day of wrangling over final details of the measure, which is a top priority of President Barack Obama. The announcement paved the way for votes in both House and Senate this week.

The $150 billion measure represents a tactical retreat for Republicans, who were generally unenthusiastic about the legislation but eager to move beyond the issue. With the campaign season starting, they don’t want Obama and Democrats in Congress to be able to claim that the GOP was standing in the way of a middle-class tax cut.

The cut to the payroll tax, which funds Social Security, expires Feb. 29. The tax cut, which will decrease revenue to the federal government, wasn’t offset by cuts in expenditures to balance the ledger sheet, which was cause for concern but not a no vote from Rep. William L. Owens, D-Plattsburgh.

“I’d have preferred to see a pay-for,” Mr. Owens said. “I think that would have been a better path to go down.”

Mr. Owens joined other Democrats in saying they would rather extend the tax break, especially for middle-income households, than continue a fight over how to cover the government’s cost. House Minority Leader Nancy Pelosi, D-Calif., had said Tuesday that Democrats would support it. They had been calling for months for a stand-alone measure to do so.

There was some confusion as recently as Tuesday about how the proposal would be crafted and whether it would include an extension of unemployment insurance and a measure to prevent Medicare payments to doctors from suddenly falling — the so-called “doc fix” that both parties support — as those provisions have also been caught up in a debate about budget offsets.

Mr. Owens said he was still trying to grasp aspects of the proposals for paying for the latter two measures, particularly the use of savings from the end of combat missions in Afghanistan and Iraq. In a sense, critics say, the government saves nothing because the wars have been paid for with borrowed money. But depending on how the government accounts for the money, it can create real savings on the budget books, Mr. Owens said.

Republicans Matthew A. Doheny and Kellie Greene, Mr. Owens’s potential November opponents, agreed that the tax cut should be passed even though it’s not funded.

“If I were in Congress, I would vote in favor of the bill,” said Mr. Doheny, a Watertown resident. “I know the good people of the north country know how to spend their money better than the current congressman and the president.”

Asked whether tax cuts should be balanced by budget cuts, Mr. Doheny said, “Right now, yes. We need to reduce the size of government.”

But political realities are getting in the way of that budgetary desire. Democrats have the better hand in the negotiation, and can blame Republicans for raising taxes on the middle class if the tax cuts are allowed to expire.

“It’s clear that Senate Democrats, as well as the Democrats in the House, do not want to have any corresponding cuts in the federal budget,” Mr. Doheny said.

Ms. Greene, a Sackets Harbor resident, said the tax cut should be extended and paid for, but Republicans faced a perception problem by demanding that the tax reduction be paid for as opposed to previous tax cuts and “wasteful spending.”

“It seems like they’re putting the average American on the chopping block, as opposed to other wasteful spending,” she said. “I don’t think their strategy was brilliant, to focus on the one issue and saying we have to pay for it. We should have been doing this for everything.”

The Associated Press contributed to this report.

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