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US Republicans agree to payroll tax deal US Republicans in climbdown on payroll tax deal
(40 minutes later)
US House of Representatives Speaker John Boehner has agreed to a vote on a bipartisan deal to extend a payroll tax cut, in an abrupt climbdown. House of Representatives Republican Speaker John Boehner has agreed to accept a bipartisan deal to extend a payroll tax cut, in an abrupt U-turn.
He had refused to accept the bill, which was passed by Republicans and Democrats in the Senate last Saturday. He had refused a vote on the bill, which was passed by Republicans and Democrats in the Senate last Saturday.
Correspondents say the deal amounts to a cave-in by House Republicans, and victory for President Barack Obama. Correspondents say the move amounts to a cave-in by House Republicans, and victory for President Barack Obama.
The tax break was due to expire on 31 December, hitting the pay slips of some 160 million American workers. The tax break is due to expire on 31 December, and would hit the pay slips of some 160 million American workers.
Under the compromise, House Republicans have a face-saving provision on making the package more friendly to small businesses. The cut saves about $1,000 (£638) each year for an average US income.
And Senate Democrats will appoint negotiators to work out a year-long deal.
The new deal will require Senate and House approval.
Republican riftRepublican rift
Under the compromise, House Republicans get face-saving language on making the package more friendly to small businesses.
And Senate Democrats will appoint negotiators to work out a year-long deal which was demanded by House Republicans.
Key elements of the Senate bill remain: an extension of the tax cut and unemployment benefits for two months.
A Republican-backed clause forcing Mr Obama to make a decision on the controversial Keystone XL oil pipeline within 60 days also remains.
The new deal will require Senate and House approval.
After briefing rank-and-file members of his party, Mr Boehner said in a news conference that the House would vote before Christmas.After briefing rank-and-file members of his party, Mr Boehner said in a news conference that the House would vote before Christmas.
President Obama and his Democratic allies have kept up relentless pressure on the House Republicans over the issue. "We were here fighting for the right thing," Mr Boehner said when asked if he had caved. "It may have not been politically the smartest thing to do."
The Senate bill would extend the payroll tax and federal unemployment benefits for two months. President Obama, who with his Democratic allies has kept up relentless pressure on Republicans over the stalemate, welcomed the announcement.
Unlike other budget stand-offs this year, this dispute has exposed Republican divisions. "This is good news, just in time for the holidays," he said in a written statement. "This is the right thing to do to strengthen our families, grow our economy and create new jobs."
Earlier on Thursday, Senate Republican Minority Leader Mitch McConnell broke his silence to urge his House colleagues to pass the measure. Earlier in the day, the president read out messages at a news conference from voters who said the package would help them pay their heating bills, visit elderly relatives and treat their families to pizza dinners.
Two freshman House Republican lawmakers also released statements on Thursday calling for a vote, breaking the unified front shown by members of that chamber in a news conference on Tuesday. Unlike other budget stand-offs this year, this one has exposed Republican divisions.
Conservative Republicans were initially sceptical about extending the payroll tax break, which economists say would aid US economic recovery. Earlier on Thursday, Senate Republican Minority Leader Mitch McConnell broke his silence on the issue to urge his House colleagues to pass the measure.
As Republican leaders demurred over how to offset the $120bn (£76bn) cost of the plan, Democrats accused them of backing tax cuts only for the wealthiest Americans. Two freshman House Republican lawmakers also called for a vote, breaking the unified front shown by members of that chamber in a news conference on Tuesday.
Correspondents say Mr Boehner's about-turn reflects a realisation by the Republican party that it would have faced blame for an effective tax rise on middle-class Americans - with a general election year looming. Earlier in the week, other Republican senators lambasted their House colleagues for opposing the deal.
President Obama said in a written statement: "This is good news, just in time for the holidays. This is the right thing to do to strengthen our families, grow our economy and create new jobs." And on Wednesday the Wall Street Journal's conservative editorial labelled the episode a "fiasco" that could end up re-electing Mr Obama.
Earlier in the day, he said in a news conference that the deal's opponents did not appreciate how much the measure would help American workers. Many Republicans were initially sceptical about extending the payroll tax break, which economists say would aid US economic recovery.
The president read out messages from voters who said the package would help them pay their heating bills, visit elderly relatives and treat their families to pizza dinners. As party leaders demurred over how to offset the $120bn (£76bn) cost of the plan, Democrats accused them of backing tax cuts only for the wealthiest Americans.
Correspondents say Mr Boehner's about-turn reflects a realisation by Republicans that they would have faced blame for an effective tax rise on middle-class Americans in a general election year.