- Associated Press - Thursday, December 15, 2011

WASHINGTON — Congressional negotiators reached agreement Thursday on a compromise spending bill to avert a weekend federal shutdown. They also worked toward a deal renewing the payroll tax cut and unemployment benefits for another year but prepared a shorter version as a fallback in case talks fell short.

Senate Majority Leader Harry Reid, Nevada Democrat, told reporters that he was still optimistic that bipartisan talks on year-long extensions of the payroll tax cut and unemployment coverage would succeed. But as a “Plan B,” he said, they were also working on a two-month extension, which would also prevent cuts in Medicare reimbursements for doctors for that period.

“We’re still working on the long-term” bill, Reid told reporters as he exited the Capitol after a day of talks over both the payroll tax and spending measures. As for the two-month version, he said, “We’ll only do that if what we’re working on doesn’t work out.”

Reid’s remarks put a slight damper on a day on which for the first time, Democratic and Republican leaders expressed optimism at prospects for swift compromise on their payroll tax standoff and a spending battle that had threatened to shutter federal agencies beginning Saturday.

A deal on a $1 trillion spending bill was reached after Republicans agreed to drop language that would have blocked President Barack Obama’s liberalized rules on people who visit and send money to relatives in Cuba. But a GOP provision will stay in the bill thwarting an Obama administration rule on energy efficiency standards that critics argued would make it hard for people to purchase inexpensive incandescent light bulbs.

The House is expected to approve the spending measure Friday, and the Senate could follow suit, possibly the same day.

Bargainers were considering the two-month version of the payroll tax cut and unemployment benefits bill because so far, they haven’t reached agreement on how a year-long extension would be paid for, said a Democratic aide who spoke on condition of anonymity to discuss the private talks. The two-month bill would cost $40 billion, according to the aide, and would let lawmakers revisit the measure after returning to Washington after the holiday season.

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