Top Republican lawmakers on Sunday said they expect to forge a deal with Democrats to extend the payroll tax cut before it expires at the end of February but offered no specifics on how they would pay for it.
"I'm confident that we'll be able to resolve this fairly quickly," top congressional Republican John Boehner said on ABC's "This Week" television show.
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, the payroll tax, which funds the federal Social Security retirement program, will revert to 6.2 percent from 4.2 percent and leave workers with about $900 less in their wallets this year.
That could harm the country's fragile economic recovery with some economists forecasting a cut in U.S. growth of up to 1 percent.
Most Republicans are eager to get the issue behind them after a bruising year-end battle, where they were in the awkward position of arguing against tax cuts.
"There is broad agreement on doing the payroll tax holiday through the end of the year ... The problem is paying for it," said top Senate Republican Mitch McConnell on CNN's "State of the Union" program.
"(Democrats) just don't want to cut any spending. That is what made it problematic. But we will get it done. We will get it done before the end of February," he said.
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 recipients of the government health program Medicare.
In the end, lawmakers agreed to hike fees the government's mortgage buyers Fannie Mae and Freddie Mac charge lenders to guarantee new loans over a 10-year period. McConnell said he did not know what the payroll tax cut deal would eventually look like.