Congressional leaders are working toward a deal to extend a payroll tax cut. The deal would also include extra jobless benefits through 2012. YNN's Washington, D.C. reporter Erin Billups has more.

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WASHINGTON, D.C. – Wednesday, members of the joint Senate-House committee put the finishing touches on a deal that would extend a payroll tax cut, maintain unemployment insurance benefits and avert reductions in Medicare reimbursement payments for doctors.

"This is a win for the American people," said Senator Max Baucus, Payroll Committee Co-Chair.

Just last week, it seemed the committee would not make its self-imposed deadline this Friday. The tide changed when House Republicans signaled they were willing to extend the two percent payroll tax cut without paying for the $100 billion bill, a move democrats have called a full-scale retreat.

"We wanted a payroll tax cut not paid for, it's there," said House Minority leader Nancy Pelosi.

Committee conferee Congresswoman Nan Hayworth insists the deal was nothing more than a compromise.

Hayworth said, “It trivializes a very serious problem. This is not a political issue, it's an economic issue, it is a dire economic issue."

Still, democrats say election year politics greased the wheels, pushing the GOP to stay on the safe side of the "no new taxes" debate. Republicans insist they wanted to put an end to divisive rhetoric.

“We were not going to allow democrats to continue to play political games. We made a decision to bring them to the table so the games would stop and we would get this work done," said House Speaker John Boehner.

Meanwhile, the agreement does pay for the $20 billion increase for doctors, known as the doc-fix, partly through cuts to Medicare providers. And the $30 billion unemployment insurance benefits extension will be paid for through pension reforms and the sale of radio spectrum, which will also create a broadband public safety network.

Many lawmakers hope the payroll tax deal signals a shift in focus on the Hill.

"We're talking about extending benefits more than we're talking about creating the infrastructure needed for capital to be invested and for our economy to grow," said Senator Richard Burr of North Carolina.

The agreement must be finalized before Thursday to allow a Friday vote.