Obama urges leaders to extend payroll tax cut

Seeking to break a stalemate that is threatening 160 million workers with January 1 tax increases, President Barack Obama urged the top leaders of Congress 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 two 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 characterise 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.

Earlier Wednesday, the combatants on Capitol Hill continued to fight over a battleground that's already well worn.

Reid started the day 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, year-long measure.

Immediate extension

"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 January 1 cut of 27 per cent in payments to doctors who treat Medicare patients.

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 holiday, but could quickly return to vote on any agreement.