Nightly News   |  December 19, 2011

Deal to extend payroll tax cut breaks down

On Saturday, 89 senators - both Democrats and Republicans – agreed on a package to extend a tax cut and unemployment benefits. But the deal fell apart when House Republicans said they are not on board. NBC’s Kelly O’Donnell reports.

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>>> well, now we turn our attention back to this country to capitol hill . just when it looked like congress was wrapping up its work for the year an unexpected fight over extending the payroll tax cut has led to yet another showdown. nbc's kelly o'donnell covering it tonight. when last we speak friday night it looked good.

>> reporter: it sure did then, but this is now. even with all the conflict we have seen with congress this stunned official washington , brian. on saturday, a whopping 89 senators voted to extend benefits and tax cuts . it would affect every working american. but tonight house republicans will not go along.

>> another phony crisis courtesy of the extremist bah-humbug house republicans .

>> reporter: tonight the house is back to work and in turmoil with freshman republicans leading the charge.

>> it's time to grow up, be adults and get this done.

>> reporter: house speaker john boehner is feeling the heat unable to get his members to accept a short-term tax cut extension.

>> you know, i have been around here for a while. i have seen congress kick the can down the road. it's time to stop the nonsense.

>> reporter: long-term unemployment benefits expire and payroll taxes go up for 160 million working americans, costing the average working about $1,000 a year. democrats say a tax increase would be republicans ' fault.

>> 16 # 0 million americans who will lose their tax cut .

>> reporter: senate republican leaders high-fived thinking they had a deal all republicans could support instead of a one-year extension, senators agreed on a short-term fix. just two months. today, house republicans insist congress keep working to get a full one-year extension and avoid another fight next year.

>> in two months you can give away money, but in two months you're not going to stimulate the economy.

>> reporter: house republicans said senators should not have left washington .

>> i didn't see the high-fiving going on, but i did hear the tune -- i'll be home for christmas coming out of that mix.

>> reporter: there is political fallout about speaker boehner's ability to deliver votes coming from some senate republicans who thought they had a deal. scott brown of has mass said scuttling this is irresponsible. boehner aides say the speaker's position is secure. brian?

>> just another day on capitol hill in washington . kelly o'donnell with our report tonight. thanks.