 On December 17 , 2011 , the Senate passed legislation to extend the Social Security payroll tax cut which had been previously enacted during the FY2011 budget negotiations . That legislation had reduced the rate from 6 @.@ 2 % to 4 @.@ 2 % for the 2011 calendar year only . The initial 2012 extension was for two months , rather than the full @-@ year extension which had been sought ; the legislation also extended unemployment benefits as well as a measure preventing a drop in rates for Medicare reimbursement ; the spending for these was offset by enacting new fees on Fannie Mae and Freddie Mac . Points of contention included a Democratic plan to fund the tax cut with a new surtax on income over $ 1 million , which was dropped in later stages of negotiation , as well as attempts by Republicans to insert language which would speed the approval of the Keystone XL pipeline , which had recently been delayed by the Obama administration . The bill was initially rejected in the House , whose leaders insisted on a full @-@ year extension , despite the fact that the Senate had already adjourned for the year . However , after criticism from other Republicans that the impasse would harm their prospects in the upcoming 2012 elections , the House leadership on December 23 , 2011 announced that it would pass the Senate bill in return for Democrats promptly beginning negotiations on a full @-@ year extension . The bill , the Middle Class Tax Relief and Job Creation Act of 2011 , was passed by the House and signed by the President later that day . 
