Senate rejects extending payroll tax cut

The Senate on Thursday sidetracked rival plans to extend a Social Security payroll tax cut, in dueling votes that pave the way for negotiations on a compromise on a core component of President Barack Obama's jobs program.

First, Republicans defeated Obama's plan to extend the payroll tax cut through the end of next year while also making it more generous for workers.

Minutes later, in a vote that exposed rare divisions among Senate Republicans, more than two dozen of the GOP's 47 lawmakers also voted to kill an alternative plan backed by their powerful leader, Mitch McConnell of Kentucky, to renew an existing 2 percentage point payroll tax cut.

Many Republicans and even some Democrats say the payroll tax cut hasn't worked to boost jobs and is too costly with the federal deficit requiring the government to borrow 36 cents of every dollar it spends.

The defeat of the competing plans came as House Speaker John Boehner, R-Ohio, said for the first time that renewing the payroll tax cut would boost the lagging economy, a view many in his party don't share. Boehner also promised compromise on a renewal of long-term jobless benefits through the end of 2012.

Read More: Associated Press

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