WASHINGTON - President Barack Obama signed into law a two-month payroll tax cut extension on Friday, capping a year of fierce partisan combat over taxes and spending that will resume in January and play heavily in the 2012 elections.
The Senate and the House of Representatives, by voice votes in chambers nearly emptied for the holidays, passed a $33 billion bill to keep the payroll tax rate at 4.2 percent through February. It had been scheduled to increase on January 1 to 6.2 percent. Obama swiftly signed the bill.
"We have a lot more work to do," the president said at the White House. "This continues to be a make-or-break moment for the middle class ... There are going to be some important debates next year."
Obama heads to vacation in Hawaii with an important political win in his portfolio after he and fellow Democrats prevailed in the message war by backing lower taxes for middle-class Americans in the midst of a fragile economic recovery.
The battle took a toll on House Republicans led by Speaker John Boehner, who were forced to make an embarrassing retreat and agree to a short-term deal Thursday after getting hit by critics on all sides, include their colleagues in the Senate.
The temporary fix lets lawmakers lower the curtain, for now, on a year of political deadlock that in the end produced only a series of inconclusive truces. The fiscal policy debate is set to rage straight through the 2012 election season and beyond.
While Congress is on a long winter break now and does not return to full swing until late January, newly appointed negotiators are expected to begin work soon on figuring out how to pay for extending the payroll tax cut through 2012.
Republicans have sought a continued freeze on federal worker pay and cuts in Medicare benefits for the wealthy. Democrats have rejected both ideas while proposing a surtax on the wealthy to cover the extension's cost. Republicans reject this.
Both sides have been open to cutting federal workers' pension benefits. There also were last-minute Senate negotiations last week on possibly ending some tax breaks for the wealthy, such as a small one involving corporate jets.
Minutes after the bipartisan deal was passed by Congress, the bickering that has come to dominate Capitol Hill resumed.
Republican Representative Tom Price, a leader of House conservatives, immediately criticized the short-term extension, calling it a "two-month punt" and saying it would not have been needed if Senate Majority Leader Harry Reid, a Democrat, and Obama had "been willing to do their job today."
