Congressional negotiators reached a $1 trillion spending agreement Thursday evening after a four-day standoff related to demands to extend the payroll tax cut. The spending agreement will provide full funding for the remainder of fiscal 2012 for most of the government. The extension of the payroll tax cut, a separate negotiation, could be headed toward an agreement as well. Lawmakers are considering extending tax cuts for two months until a deal can be reached that will not add to the federal deficit.
A payroll tax cut extension for two months would cost the government $40 billion. With a possible extension, the debate over the payroll tax cut would pick up in January. Talks on the payroll tax cut saw increased momentum after a proposed surtax on incomes over $1 million was dropped.
