Senate Democrats plan to offer a new proposal on Monday to extend a popular payroll tax cut amid signals that Republican leaders would accept a compromise that covers the cost to the federal Treasury.

Senate Budget Committee Chairman Kent Conrad, a Democrat, said that the offer would be a 'serious attempt to move this ball forward,' and avoid a December 31 expiration of the popular tax cut.

The proposal will be put forward by Senate Majority Leader Harry Reid, a Democrat, Mr Conrad told the 'Fox News Sunday' program.

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