12/23/2011 01:43 EST | Updated 02/22/2012 05:12 EST

Obama signs a 2-month extension of payroll tax cut, ending standoff with House Republicans

WASHINGTON - President Barack Obama has signed legislation extending a payroll tax cut for two months. The action concludes an end-of-year drama that split Republicans and threatened a tax hike on 160 million Americans.

Obama acted Friday after the House and Senate approved the tax cut extension, which will maintain a pension tax at 4.2 per cent. The legislation also extends unemployment insurance for jobless workers and forces Obama to make a decision within 60 days on whether to permit construction of a Canada to Texas oil pipeline opposed by environmental groups.

By signing the bill, Obama capped nearly a week-long standoff with House Republicans who demanded a full-year extension. Under a deal reached Thursday, House and Senate leaders named negotiators to begin working on a longer-term bill.