Lawmakers on Capitol Hill are in a stalemate. Republicans in the House have rejected a Senate approved plan to extend the payroll tax and jobless benefits for two months.
The Republicans, who want a one-year extension, want the Senate to return to Washington to negotiate. If there's no action taken before the end of the year, payroll taxes for workers go up January 1.
Lawmakers voted 229-193 to send the measure back to the Senate. But Majority Leader Harry Reid says he will not allow any bargaining until the Republicans relent and the House approves the short-term bipartisan measure which passed the Senate with an overwhelming majority. President Barack Obama has voiced support for the legislation, but has also said it needs to be quickly extended to cover all of 2012.
The House passed a full-year extension last week, but included many spending cuts opposed by Democrats. Republican members erupted in frustration at the Senate measure, which drops changes to the unemployment insurance system that conservatives wanted along with cuts to Obama's health care law.
Lawmakers are looking to renew a 2 percentage point cut in the Social Security payroll tax, plus jobless benefits averaging about $300 a week for the long-term unemployed. The impasse could mean a tax hike for 160 million American workers in January, while almost 2 million people could lose their unemployment benefits.