Senate passes two-month payroll tax, unemployment extension

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Sen. Joe Manchin, D-WV, left, and Sen. Mark Kirk, R-Ill., comment as the Senate approves legislation that extends Social Security payroll tax cuts for two months, at the Capitol in Washington. The action also extends long-term unemployment benefits for another two months and forces President Barack Obama to approve construction of a controversial oil pipeline. (AP Photo/J. Scott Applewhite)

The Senate has passed a temporary extension of a payroll tax holiday and jobless benefits, in a partial victory for President Barack Obama that sets the stage for yet another showdown in February.

The temporary extension gets Congress out of town for the holidays, but it leaves unresolved the question of a longer term extension of the payroll tax cut and unemployment benefits, and it could mean a fight over oil drilling in February.

From MSNBC.com:

While a partial victory for President Barack Obama’s year-end jobs agenda, the measure awaiting House approval next week contains a provision demanded by Republicans to pressure the White House into approving construction of a Canada-to-Texas oil pipeline that promises thousands of jobs.

Democratic and GOP leaders option for the short-term extension after failing to agree on big enough spending cuts to pay for a full-year renewal of the payroll tax cut. The 2 percentage point tax cut affects 160 million taxpayers. The weekly jobless payments average about $300 for millions of people who have been out of work for six months or more.

The measure was approved by an 89-10 vote during a Saturday session.

Extending the payroll tax cut is a top priority for the Obama administration, which has said not extending the measure would mean an average $1,000 per year tax hike for middle class families.