Senate Majority Leader Harry Reid, D-Nev., offered Monday to compromise on how to pay for the payroll tax cut extension in an effort to convince more Republican lawmakers to vote for the bill.

Last week, both Democratic and Republican versions of the tax cut extension failed to win enough votes to pass in the Senate (see Senate Fails to Pass Payroll Tax Cut Extension Bills). The Democratic version would pay for the cost of extending and expanding the payroll tax cut for both individuals and businesses through a 3.25 percent surtax on millionaires, while the Republican version offset the cost of simply extending the payroll tax cut for employees with a three-year pay freeze for federal workers, a 10 percent cut in the federal workforce and means testing of both unemployment benefits and Medicare.

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