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Congress bickers toward year-end compromise

By David Espo

Associated Press

Published: Thursday, Dec. 1 2011 3:16 p.m. MST

House Speaker of the House John Boehner of Ohio gestures during a news conference on Capitol Hill in Washington, Thursday, Dec. 1, 2011.

Susan Walsh, Associated Press

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WASHINGTON — Republicans and Democrats bickered and blustered Thursday toward eventual compromise legislation extending expiring Social Security payroll tax cuts and long-term jobless benefits through 2012, each seeking political advantage for elections almost a year distant.

The White House weighed in with a written statement opposing the GOP approach, which presidential press secretary Jay Carney said includes "window dressing" hung by Republicans seeking to cut costs by freezing federal workers' pay through 2015 and reducing the government bureaucracy.

By contrast, President Barack Obama and most Democrats in Congress want to extend and expand the payroll tax cut and pay for it by slapping a 3.25 percent surtax on incomes of $1 million or more.

Senate Majority Leader Harry Reid said Republican opponents "insist on helping the very wealthy while turning their back on the middle class," while another member of the leadership, Sen. Richard Durbin of Illinois, said they "put up a transparent fig leaf" that would kill jobs rather than create them.

In remarks on the Senate floor, the Senate Republican leader, Mitch McConnell of Kentucky, said the issue reflected poorly on both Obama and his allies in Congress.

"There's no reason folks should suffer even more than they already are from the president's failure to turn this jobs crisis around," he said. "But there's also no reason we should pay for that relief by raising taxes on the very employers we're counting on to help jolt this economy back to life."

That left both parties seeking the political high ground — Democrats accusing Republicans of siding with the rich, and Republicans countering that Democrats were taxing small business owners who create jobs — in advance of a pair of Senate test votes expected late Thursday or Friday morning.

Neither of two rival measures was expected to gain the 60 votes necessary for passage, a double-barreled rejection likely to clear the way for talks on a compromise.

Across the Capitol, House Republicans readied legislation of their own that aides said likely would include the tax cut extension as well as renewed benefits for long-term victims of the worst recession in decades and a painfully slow recovery.

House Speaker John Boehner, R-Ohio, made clear that all costs must be paid for, and said higher taxes were a non-starter.

"Republicans are ready to work with the president and the Democrats to extend the payroll tax cut and unemployment insurance temporarily, but they must be offset with spending cuts elsewhere," he said.

There were other issues under negotiation as lawmakers looked toward the end of a highly partisan year, the first in a new era of divided government.

Boehner said lawmakers were discussing a bill to avoid a scheduled 27 percent cut on Jan. 1 in reimbursement rates for doctors treating Medicare patients.

The two parties also looked for agreement on a measure to fund the government through the Sept. 30 end of the budget year.

Boehner added that he likely would try to include some of the 20 House-passed bills that are part of a GOP jobs package in one of the year-end wrap-up bills. Most of the measures would block federal regulations on various industries, and are stalled in the Senate.

With unemployment hovering around 9 percent nationally, Obama urged Congress in September to renew and expand the Social Security payroll tax cut for workers that he signed a year ago, and called as well for an extension of benefits that can cover up to 99 weeks for the long-term jobless.

State unemployment insurance programs guarantees coverage for six months, but as in previous downturns, Congress approved additional benefits in 2008. Expiration of those payments would mean an average loss of $296 in weekly income for 1.8 million households in January, and a total of 6 million throughout 2012.

On the tax cut extension, Republicans prefer a simple one-year continuation of the existing law, jettisoning Obama's call to deepen the cut while expanding it to cover an employer's portion of payroll taxes.

To pay for the measure, Senate Republicans proposed freezing federal workers' pay through 2015 — extending a two-year-freeze recommended by Obama — and reducing the bureaucracy by 200,000 jobs through attrition.

The bill also would raise Medicare premiums for the wealthy, and take steps to deny unemployment benefits and food stamps to anyone with a seven-figure income.

Republicans circulated statistics from the Internal Revenue Service reporting that tax filers with $1 million or more in income received a total of $20.8 million in unemployment benefits in 2009, the latest year for which figures are available. Their bill would impose a 100 percent tax on those payments — an irony for a party that historically has opposed any tax increases.

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Associated Press writer Donna Cassata contributed to this report.

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