Washington (CNN) -- Both chambers of Congress passed an amended version of the two-month payroll tax cut extension Friday, sending the measure to President Barack Obama's desk and handing Democrats a hard-fought victory on an issue -- taxes -- that has historically favored their Republican counterparts.
The measure cleared the Democratic-controlled Senate and the Republican-controlled House of Representatives by unanimous consent, a procedural move allowing the measure to pass even though most members of Congress are now home for the holidays.
Among other things, the measure also includes a two-month extension of emergency federal unemployment benefits and the so-called "doc fix," a delay in scheduled pay cuts to Medicare physicians.
President Barack Obama is expected to sign the bill shortly, wrapping up a legislative year marked by repeated partisan brinksmanship and declining public approval of a seemingly dysfunctional Congress.
Obama is also expected to sign a separate appropriations bill funding the government through September 2012, before heading off to Hawaii to join his family for the holiday break.
House and Senate members will resume negotiations on a year-long extension of the tax cut -- along with a lengthier unemployment benefits extension and doc fix -- when Congress reconvenes in January.
Political analysts believe that the showdown over the payroll tax cut has eroded GOP strength on the party's core issue of lower taxes. While GOP leaders first questioned the merit of the tax holiday and then complained that a short-term extension would be more trouble than it's worth, Obama used the standoff to portray the Republicans as defenders of the rich with a callous attitude toward the burdens of the middle class.
House Speaker John Boehner, R-Ohio, finally succumbed Thursday to calls from across the political spectrum for House Republicans to stop blocking congressional approval of the two-month extension, which had been previously approved by the Senate in overwhelming bipartisan fashion.
Boehner, in announcing the deal to reporters late Thursday, insisted the House GOP's prior opposition to the Senate plan was the right thing to do, even if it turned out to be politically questionable.
"It may not have been politically the smartest thing in the world," Boehner said, but the end result was "we were able to fix what came out of the Senate."
The speaker also acknowledged the pressure he was under, saying: "I talked to enough members over the last 24 hours who say we don't like the two-month extension and if you can get this fixed, why not do the right thing for the American people even if it's not exactly what we want."
Thursday's agreement produced essentially the same proposal House Republicans rejected from the Senate earlier this week. House Republicans were given slim political cover through the addition of legislative language designed to ease the administrative burden on small businesses implementing the plan, as well as a commitment to continue negotiations on a one-year extension of the payroll tax cut and other benefits.
While the two-month extension was shorter than desired, Obama repeatedly urged congressional leaders over the past week to follow through on their stated intention to negotiate a one-year extension that all parties now publicly claim to favor.
Under the deal, the payroll tax will remain at the current 4.2% rate instead of reverting to the 6.2% rate it was at before the cut enacted last year. Without congressional action, the higher rate would have returned in 2012, meaning an average $1,000 tax increase for 160 million Americans. The typical worker's take home salary would have been reduced by about $40 per pay period without the tax cut.
A tea party-led House GOP uprising last weekend caused Boehner to initially reject the Senate's two-month plan, instead pushing for an immediate 12-month extension and setting up this week's political showdown in the final days before the payroll tax cut was set to expire. Critics of the House GOP's stance insisted that the Senate's shorter extension was necessary to give negotiators more time to hammer out a deal over how to pay for the continuation.
By the time Thursday rolled around, however, the speaker was ready to raise the white flag of surrender. According to GOP sources, Boehner held a conference call Thursday afternoon with his fellow House Republicans in which the speaker refused to allow any members to ask questions or raise objections. One Republican House member on the call described Boehner as "tired and ticked off."
Analysts said Boehner had little choice but to back down.
"It became increasingly obvious he had to fold," said CNN Senior Political Analyst David Gergen, using poker terminology. Boehner was under "intense pressure from senior Republicans" over a situation that "became so botched," he said.
Darrell West , the vice president and director of governance studies at the Brookings Institution, said the issue has worked in the favor of Democrats because they had Republicans "seemingly willing to accept a tax increase" by opposing the Senate extension of the payroll tax cut.
Boehner's stance drew sharp criticism, including an editorial this week in the conservative Wall Street Journal that said House Republicans had lost the political advantage of advocating tax cuts to Obama and the Democrats.
On Thursday, Senate Republican leader Mitch McConnell, R-Kentucky, publicly called for Boehner to accept a short-term extension. Similar statements by other conservative Republicans showed the tide turning against the speaker and his GOP lieutenants.
Conservative Rep. Sean Duffy, R-Wisconsin, was among those adding his voice to GOP calls for House Republicans to relent in their standoff.
"While I would prefer a year-long tax holiday, I refuse to let anyone play games with my constituents who stand to face a significant tax hike if we don't act," Duffy said Thursday in a statement. "That's why I will support any option to extend the payroll tax cut."
A number of Republicans have said the party should have declared victory after winning an agreement by Obama -- as part of the payroll tax cut package -- to make a decision within the next 60 days on whether to proceed with the proposed Keystone XL oil pipeline from Canada to the Gulf of Mexico. Republicans and some Democratic union leaders say the controversial pipeline will create thousands of new jobs; critics question its environmental impact.
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