WASHINGTON -- Senate leaders agreed on compromise legislation Friday night to extend Social Security payroll tax cuts and jobless benefits for two months while requiring President Barack Obama to accept Republican demands for a swift decision on the fate of an oil pipeline that promises thousands of jobs.
A vote is expected today on the measure, the last in a highly contentious year of divided government.
House passage is also required before the measure can reach Obama's desk.
In a statement, White House communications director Dan Pfeiffer indicated Obama would sign the measure, saying it had met his test of "preventing a tax increase on 160 million hardworking Americans" and avoiding damage to the economy recovery.
The statement made no mention of the pipeline. One senior administration official said the president would almost certainly refuse to grant a permit. The official was not authorized to speak publicly.
Racing to adjourn for the year, lawmakers moved quickly to clear separate spending legislation avoiding a partial government shutdown threatened for midnight.
The developments came a few hours after the White House publicly backed away from Obama's threat to veto any bill that linked the payroll tax cut extension with a Republican demand for a speedy decision on the 1,700-mile Keystone XL oil pipeline proposed from Canada to Texas.
Obama recently announced he was postponing a decision until after the 2012 elections on the much-studied proposal. Environmentalists oppose the project, but several unions support it, and the legislation puts the president in the uncomfortable position of having to choose between customary political allies.
Republican senators leaving a closed-door meeting put the price tag of the two-month package at between $30 billion and $40 billion said the cost would be covered through a fee on mortgages backed by Fannie Mae and Freddie Mac.
The legislation would also provide a 60-day reprieve from a scheduled 27 percent cut in the fees paid to doctors who treat Medicare patients.
Several officials said it would require a decision within 60 days on the pipeline, with the president required to authorize construction unless he determined that would not be in the national interest.
Senators in both parties hastened to claim credit for the deal.
Sen. Richard Lugar issued a statement that said the compromise included legislation he authored "that forces President Obama to make a decision" on the pipeline. The Indiana Republican faces a strong primary challenge next year from a tea party-backed rival.
Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, said he had "brokered a final deal by bringing lawmakers from both parties together to support jobs."