Obama urges short-term extension of payroll tax cut

\WASHINGTON -- Seeking to break a stalemate that is threatening 160 million workers with Jan. 1 tax increases, President Barack Obama urged the top leaders on Capitol Hill on Wednesday to first pass a short-term extension while promising to work with lawmakers on a full-year measure.

Obama's calls to House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., came as the two leaders were trapped in a deadlock over competing demands. House Republicans insist on immediate talks on a full-year measure; Democrats insist the House adopt a bipartisan Senate plan for a 60-day extension and focus on the full-year plan when Congress returns from vacation in January.

The White House said Obama told Boehner that "the short-term bipartisan compromise passed by almost the entire Senate is the only option to ensure that middle-class families aren't hit with a tax hike in 10 days and gives both sides the time needed to work out a full-year solution."

An aide to the speaker said Boehner urged the president to press Reid to engage in negotiations on a full-year extension of a 2 percentage point tax cut for every worker and jobless benefits for millions of people out of work for more than six months.

"Let's get this done today," Boehner told Obama, according to the aide, who required anonymity to characterize a private conversation.

Boehner's reaction gave no hints of a breakthrough, even though House Republicans appear increasingly isolated. They're not getting support from Senate Republicans and are battling against a president whose approval numbers, while not impressive, are better than theirs.

Barring any action by Congress, Social Security payroll taxes will go up almost $20 a week for a worker making a $50,000 salary -- that's $40 less for a typical paycheck or $1,000 over the whole year. Almost 2 million people would lose unemployment benefits as well.

The stalemate has centered on how to pay for another year's tax cut without adding to the deficit. That is the debate ahead -- if the two-month deal gets done first.

Reid started Wednesday with a letter to Boehner to urge him to bring House lawmakers back to Washington and approve a bipartisan measure the Senate approved overwhelmingly last weekend. That bill would extend the payroll tax cut and jobless benefits for two months, giving bargainers time to agree to a more expensive, yearlong measure.

"Because we have a responsibility to assure middle-class families that their taxes will not go up while we work out our differences, we must pass this immediate extension first," Reid wrote.

Minutes later, Boehner and other top House Republicans invited reporters into a meeting where they urged Reid to bring senators back to town so they can negotiate over a yearlong extension of the tax cut and jobless benefits. The bill would also postpone a scheduled Jan. 1 cut of 27 percent in payments to doctors who treat Medicare patients.

"All we're asking for is to get Senate members over here to work with us to resolve our differences so we can do what everybody wants to," Boehner said.

Aides to Boehner and Reid couldn't say whether Boehner and Reid have actually spoken in the past week. "As always, we keep the lines of communication open," Boehner spokesman Michael Steel said.

Obama and leaders of both parties want to extend the tax cuts and jobless benefits and prevent the cut in doctors' reimbursements for an entire year. Most lawmakers have left Washington for the Christmas and New Year's holidays but could quickly return to vote on any agreement.

In a moment of political theater, Democrats tried to get the House to consider the two-month extension of the payroll tax cut as the chamber convened for a ceremonial session at which no formal business was scheduled. But acting speaker Rep. Michael Fitzpatrick, R-Pa., adjourned the chamber and walked out.

"Mr. Speaker, you're walking out. You're walking away just as so many Republicans have walked away from middle-class taxpayers" and others, Rep. Steny Hoyer of Maryland, the No. 2 House Democrat, shouted to an empty chair where the House presiding officer sits.

Republicans also came under pressure from their own usual allies when an opinion article on the Wall Street Journal's editorial page accused the GOP of botching the fight over the payroll tax cut.

"Republicans would do best to cut their losses and find a way to extend the payroll holiday quickly," the editors wrote.

On Tuesday, the House voted 229-193 to kill the Senate measure. Afterward, Obama signaled he'll use his presidential megaphone to try to force Republicans controlling the House into submission.

"Now let's be clear," Obama said at the White House. "The bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on Jan. 1. The only one."

In a year of legislative brinkmanship, the latest fight spilled into the lap of Republican candidates running for president.

Former House speaker Newt Gingrich chastised Congress, particularly the Senate, for failing to extend the 2 percentage point tax cut for a full year.

"They can't figure out how to pass a one-year extension, so the Senate leaves town?" Gingrich remarked while campaigning in Iowa. "It's an absurd dereliction of duty."

Rival Mitt Romney refused to take a position, steering clear of Washington's policy debate.

"I'm not going to get into the back-and-forth on the congressional sausage-making process," the former Massachusetts governor told reporters after events in New Hampshire. "I hope they're able to sit down and work out a solution that works for the American people."