Payroll tax cuts negotiations continue as the February 29 deadline nears. Both Republicans and Democrats agree that the tax cut should be extended for a full year before it expires. An analyst for Moody Analytics told The New York Times that allowing the tax cut to expire could throw off the economic recovery.

However, the debate remains over how the extension should be funded. Extending the cuts at the current rate will cost $170 billion when combined with unemployment benefits and maintaining Medicare payment fees. Republicans have suggested covering the costs by continuing a freeze on federal workers pay, which would save around $26 billion. Democrats have asked to raise taxes for those with higher incomes.

A decision to extend the payroll tax at a lower rate could even result in growth for the economy. The average family would benefit from the tax cuts with approximately $1,000 more in spending power, which translates to over $100 billion nationwide, the source reports.

There are only three weeks remaining before the 4.2 percent payroll tax expires and increases to 6.2 percent. A nine-day recess that begins on February 18 limits the time even further, so lawmakers must work fast to negotiate a solution. 

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