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Obama signs payroll tax agreement into law

By Tom Cohen, CNN
updated 10:39 PM EST, Wed February 22, 2012
President Obama says he's ready to move ahead with his domestic agenda with or without congressional support.
President Obama says he's ready to move ahead with his domestic agenda with or without congressional support.
STORY HIGHLIGHTS
  • The payroll tax cut extension passed Congress last week
  • The tax break is worth about $83 a month for someone making $50,000 a year
  • The agreement also extended unemployment benefits
  • It prevents a cut in payments for Medicare doctors

Washington (CNN) -- President Barack Obama on Wednesday signed into law the agreement passed by Congress last week to extend the payroll tax cut and unemployment benefits while preventing a cut in payments to Medicare doctors.

The signing, announced in a White House statement, resolves those issues for the rest of 2012, beyond the November election in which Obama will seek a second term.

On Tuesday, Obama congratulated Congress for overcoming sharp partisan divisions that have stymied progress in the past year and challenged legislators to enact the rest of his administration's economic priorities.

"For a typical middle-class family, (the payroll tax cut) is a big deal," Obama said. "Now my message to Congress is don't stop here. Keep going. ... This may be an election year, but the American people have no patience for gridlock (and) reflexive partisanship."

Earlier Wednesday, the administration unveiled Obama's plan to overhaul the corporate tax code by reducing the corporate tax rate to 28% from 35% and eliminating dozens of business tax breaks.

In addition, Obama has outlined a number of other proposals also believed to have little or no chance of winning approval among Republicans on Capitol Hill, most notably the so-called "Buffett Rule" designed to ensure people with annual incomes of more than $1 million pay at least a 30% tax rate.

The White House believes Republicans are more willing to make deals in the wake of a bruising fight over raising the debt limit last year, according to a senior administration official. Political analysts, however, note that even if Obama's proposals fail to pass Congress, the president can draw a clear distinction between himself and his Republican opponent in November.

Some analysts have speculated Obama is also laying the groundwork for a possible reprise of Harry Truman's successful 1948 campaign against a so-called "do-nothing" Congress.

At the moment, however, Democrats are taking a victory lap for the extension of the payroll tax cut. The roughly $100 billion measure, a key part of Obama's economic recovery plan, has reduced how much 160 million American workers pay into Social Security on their first $110,100 in wages. Instead of paying 6.2% had it lapsed, they'll be paying 4.2%, a break worth about $83 a month for someone making $50,000 a year.

The measure, which passed both the House of Representatives and the Senate last Friday, also extends unemployment benefits and avoids a Medicare fee cut for doctors for the rest of the year. Obama has promised to sign the bill into law when it hits his desk this week.

The payroll tax issue proved problematic for Republicans, who were caught between competing goals of providing the tax cut and paying for it. GOP leaders this month acknowledged they angered voters by initially raising objections to the unpaid tax-cut extension.

CNN's Alan Silverleib, Adam Aigner-Treworgy and Jessica Yellin contributed to this report.

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