US President Barack Obama has welcomed a deal to give a tax break to millions of middle-class Americans, but called on lawmakers there to work "without drama" to extend it for a year.
"I'm pleased to say that they've got it done," Mr Obama said in a brief White House statement just after signing the bill passed by the Senate and House of Representatives to extend the payroll holiday for two months.
"And when Congress returns, I urge them to keep working without drama, without delay, to reach an agreement that extends this tax cut as well as unemployment insurance through all of 2012.
"It is the right thing to do because more money spent by more Americans means more businesses hiring more workers and that's a boost for everybody."
Republican leaders had bowed to intense pressure and voted to extend the payroll tax holiday for 160m Americans, allowing Mr Obama to end the year on a triumphant note after being thwarted by Republicans for months.
The US president was swiftly then to leave Washington to fly to Honolulu, Hawaii for Christmas, joining up with his family who have already been on the islands for several days.
The deal, which sailed unopposed through both the Senate and the House of Representatives, allows the Democratic president to mark Christmas on a triumphant note after spending months being thwarted by Republicans.
With the nation hurtling into the 2012 election year when Mr Obama will seek a second White House term, House Republicans agreed to back a two-month extension of a 2% payroll tax cut, just days after blocking the measure which emerged as a compromise from the Senate.
Their tactics had sparked a torrent of derision from the media, some conservative luminaries and Democrats who eagerly seized a chance to pose as the party of lower taxes, a mantle that Republicans usually claim.
Democratic Senate Majority Leader Harry Reid had sharp words for conservative lawmakers, saying he hoped they had had "a very good learning experience, especially those who are newer to this body."
"People wonder why the approval rating for Congress is so low. I don't wonder. Everything has been a knockdown, dragout fight. There is no reason to do that," Reid said.
He said lawmakers should "understand that legislation is the art of compromise, consensus building; not trying to push their way through on issues that you don't have the support of the American people."
Mr Obama had enlisted the help of supporters online to argue that many Americans would have been badly hurt by losing $40 from their paycheck every two weeks if the tax holiday expired on 1 January.
"I want to thank every American who raised your voice to remind folks in this town what this debate was all about," Mr Obama said yesterday.
"It was about you. And today, your voices made all the difference."
The Senate had previously agreed to a temporary two-month measure.
"(It) may not have been politically the smartest thing in the world," Republican House Speaker John Boehner admitted of the Republican gambit to hold out for a year-long extension, partly powered by Tea Party conservatives.
The new compromise will also see Reid appoint negotiators to work on a one-year extension, and included face-saving language easing the burden of the tax cut on small businesses, which Republicans were able to argue was included only as a result of their holdout.
The deal means the payroll tax deduction, which is separate from income taxes and funds the US retirement system, will remain at 4.2% instead of rising to 6.2% on 1 January 2012.
2m Americans will also keep unemployment benefits that were due to expire at the end of the year.
After days of wrangling, Republican Senate Minority Leader Mitch McConnell, one of the sharpest Washington operators, weighed in yesterday, sketching the eventual compromise in an intervention that may have been decisive.
Mr Obama will savour a victory after a stalemate that has seemed to boost his standing, with his approval ratings approaching the crucial 50% mark, 11 months before he asks voters for a second term.
The outcome of the tussle may also quell some critics who have argued that the president has frequently come off second best in the gruelling daily trench warfare with Republicans in Congress.
But Mr Obama did not have things all his own way.
The deal preserves language in the payroll tax bill requiring him to take another look at a controversial US-Canada oil pipeline project he had hoped to defer until after his re-election bid.
The plan to build an extension to the Keystone XL pipeline has split environmentalists, union workers and business groups in the Democratic base vote, and looms as a high stakes decision for Mr Obama.
