McConnell optimistic payroll tax cut will be extended

LOUISVILLE (KY) - Senate defeat of competing Democratic and Republican plans to extend a cut in the Social Security payroll tax has punted the issue to the House, where GOP leaders are facing ideological divisions within the party over whether to pass the tax holiday.

The focus is on the GOP-controlled House after Senate votes Thursday exposed wide reluctance by Republicans to go along with the costly proposal - a centerpiece of President Barack Obama's jobs agenda.

As expected, Senate 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.

But 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 leader, Mitch McConnell, R-Ky., to renew an existing 2 percentage point payroll tax cut.

While addressing the Kentucky Farm Bureau in Louisville, McConnell said he was confident the senate would pass bill before the end of December.

"I don't think we need to raise taxes on working people going into next year in this recession.  I think before this congress finishes in December, I think we will extend the payroll tax holiday for another year," McConnell said.

(The Associated Press contributed to this report.  All rights reserved.)