US congressional leaders agreed early Thursday on a $100 billion deal to extend a middle class tax cut and unemployment benefits with a surprising lack of partisan bickering.
The deal, announced just after midnight on Thursday by Senate Finance Chairman Max Baucus, a Democrat, and House Ways and Means Chairman Dave Camp, a Republican, could be voted on as early as Friday, according to US media.
"Senator Baucus and I are here to say that we have reached an agreement," Camp said with Baucus by his side, according to the Politico news website.
They did not comment on the details of the plan, but it was expected to extend a cut in the Social Security tax rate -- from 6.2 to 4.2 percent -- for another 10 months, Politico said.
The compromise would also see an extension of unemployment benefits and prevent a sharp decrease in payments to physicians serving patients covered by the state-run Medicare health program for elderly Americans.
In a key concession, Republicans reportedly did not require the cost of the tax cuts to be matched by spending cuts elsewhere in the budget.
The deal would be a victory for US President Barack Obama and point to a new spirit of compromise among bitterly divided Republican and Democratic lawmakers eyeing record low approval ratings in the heat of an election season.
The key compromise involved a deal whereby new federal employees will pay more into their pension plans while the contributions of existing employees will remain the same, the Washington Post reported.
Earlier this week, House Republican leaders dropped their opposition to extending the federal payroll tax holiday, averting a fight with Obama on an issue that threatened to hurt them with voters.
House Speaker John Boehner and his top lieutenants announced Monday that they would no longer insist that the $100 billion cost of the extension be offset with spending cuts elsewhere.
The payroll taxes affect salaried workers, so reducing the amounts withheld from paychecks was a key element of the Obama administration's efforts to bolster the US economic recovery.
A two-month reduction in the payroll tax was agreed in December as part of a tax compromise, but only after a rebellion by some House Republicans caused a bitter partisan standoff.
In the wake of the fight, polls showed public approval of Congress falling to a record low of around 12 percent in recent weeks.