Ahead of Christmas, President Barack Obama today achieved a major political victory when Republicans in the House of Representatives caved to his demands and agreed to extend the pay roll tax cut for 160 million American workers for two months.
Welcoming the deal reached by congressional leaders, Obama said it was a victory for weary Americans as they prepared for Christmas.
"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," he said in a statement.
"This is real money that will make a real difference in people's lives," Obama said, noting that due to the agreement, every working American will keep his or her tax cut – about $1,000 for the average family.
"That's about $40 in every paycheck. Vital unemployment insurance will continue for millions of Americans who are looking for work," he said.
Obama also urged the lawmakers to keep working to reach an agreement that will extend this tax cut and unemployment insurance for all of 2012 without drama or delay.
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Obama's statement came soon after John Boehner, the House of Representatives Speaker, announced he has agreed to pass what the Democrats and the White House have been demanding – to extend the pay roll tax for two months and finally for the year after the Congress convenes in the New Year.
Boehner had refused a vote on the bill, which was passed by Republicans and Democrats in the Senate last Saturday.
The tax break is due to expire on December 31, and would hit the pay slips of some 160 million American workers.
"Senator [Harry] Reid [the Senate Majority Leader] and I have reached an agreement on payroll tax relief on behalf of the American people," Boehner said, adding key parts of this agreement are that on January 1st no American worker will see an increase in their taxes.
"We will ensure that a new complex reporting burden is not unintentionally imposed on small businesses. This solution will, at a minimum, prevent small businesses bearing new administrative burdens and ensure that American workers will see their tax relief as soon as possible," he said.
Boehner said the Senate will join the House in immediately appointing conferees, with instructions to reach agreement on a full-year payroll tax extension.
"We will ask the House and Senate to approve this agreement by unanimous consent before Christmas," he said.
"I am grateful that the voices of reason have prevailed and Speaker Boehner has agreed to pass the Senate's bipartisan compromise," Reid said in another statement.