Senate Republicans have blocked a Democratic measure to extend the payroll tax cut and assess a new tax on income over $1 million to help pay for it.
Sixty votes were needed for passage. The vote was 50-48.
A separate Republican bill to extend the payroll tax cut calls for freezing federal pay as well as reducing the federal workforce by 10%, provisions rejected by Obama and Democrats.
The lower payroll tax rate is set to expire at the end of the year.
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