Top Republican lawmakers have said that they expect to reach a deal with Democrats to extend the payroll tax cut before it expires at the end of February, but they offered no specifics on how they would pay for it. Republican and Democratic lawmakers have started negotiating a deal to extend unemployment benefits and a tax break for 160 million Americans beyond February. If they fail to reach agreement, the payroll tax, which funds the Social Security retirement program, will revert to 6.2% from 4.2%, leaving workers with about $900 less in their wallets this year.
Disagreements over how to pay for the tax break hampered lawmakers’ efforts to extend it until the end of this year. Democrats had proposed a surtax on millionaires. Republicans had proposed cutting salaries and benefits for federal workers as well as raising premiums on wealthier Medicare recipients.
In the end, lawmakers agreed to increase the fees the government’s mortgage backers, Fannie Mae and Freddie Mac charge lenders to guarantee loans.
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