House Republicans have agreed to pass a two-month extension of the payroll tax holiday for 160 million U.S. workers, congressional sources told Talking Points Memo and the National Journal.

Republicans and Democrats in the Senate struck a short-term compromise on the payroll tax cut and employment insurance. But House Speaker John Boehner had said the two-month proposal created uncertainty for job-creating small businesses.

ADVERTISEMENT

Facing pressure from the White House and members of their own party, Republicans in the House have reportedly agreed to pass the Senate compromise bill but with face-saving language added to make it more palatable to small businesses.

Senate Majority Leader Harry Reid has agreed to appoint members to a conference committee to resolve differences between Senate and House proposals after the two-month extension passes.

An aide revealed Boehner called Obama Thursday to ask him to send his economic team to Capitol Hill to discuss a year-long extension — a goal the president originally supported.

“The president declined the Speaker’s offer,” the aide said.

The White House said Obama told Boehner a two-month extension was the only viable option with the January 1 deadline looming.

ADVERTISEMENT

But floating a possible compromise, Obama said he would commit to working on the details of a year-long extension as soon as the House passed a two-month bill.

Republican Senate Minority leader Mitch McConnell on Thursday also weighed in, breaking the silence he has maintained since the Senate acted at the weekend.

McConnell called on Reid to appoint negotiators to thrash out a one-year plan and for the House to pass the two-month payroll tax holiday extension.

ADVERTISEMENT

“These goals are not mutually exclusive. We can and should do both.”

But Reid has refused to recall his members to seek a new deal, after the House blocked the Senate compromise which passed 89-10 at the weekend.

ADVERTISEMENT

As a complex political chess game unfolds in Washington, Obama has put off plans to head to the surf and sand of Hawaii to join his wife and daughters for their annual end-of-year vacation.

If the benefit is not extended, the payroll tax, which is separate from income taxes, would go up to 6.2 percent from 4.2 percent on January 1 and two million Americans would lose federal unemployment benefits.

Another key party figure meanwhile joined a torrent of criticism of House Republicans, which included a lacerating critique of the “fiasco” by the Wall Street Journal‘s conservative editorial page.

ADVERTISEMENT

Karl Rove, former Republican president George W. Bush’s political guru, told Fox News that his side had lost the “optics” of the debate.

The president took to Twitter late Wednesday to deliver a rare, personal tweet.

“Everyone should see what #40dollars means to folks: groceries, daycare, gas copays. Keep it going. I’ll talk abt this tmrow @12:15ET. -bo,” the president tweeted.

With AFP.