The Senate, which has passed few of the items on the president’s long wish list of economic measures this year, could hold an initial vote on the matter this week.
“What’s it going to be? . . . I hope members of Congress think hard about this, because their actions lately don’t reflect who we are as a people,” Obama said. “What does it say about us if we’re willing to cut taxes for the people who don’t need them, and raise them on folks who do need a tax break? We are better than that. America is better than that.”
As he has done throughout his jobs tour, Obama sought to cast the GOP as standing in the way of proposals that could help strengthen the weak economy and put Americans back to work. But in this case, Republican leaders have signaled a willingness to support the payroll tax cut.
“Republicans will put aside their misgivings and support this [payroll tax cut] extension, not because we believe, as the president does, that another short-term stimulus will turn this economy around, but because we know it will give some relief to struggling workers out there who continue to need it nearly three years into this presidency,” Senate Minority Leader Mitch McConnell (Ky.) said Wednesday.
Republicans are, however, resisting Obama’s proposal to expand the tax break to 3 percent of wages for workers and to create a related benefit for employers. They are also battling Democrats over how to cover the cost of the measure. On Wednesday, Senate Republicans offered a proposal to extend the current pay freeze for federal workers for an additional three years, trim the federal workforce by 10 percent and force high earners to pay more for programs such as Medicare. The wealthy would also be blocked from receiving benefits such as food stamps and unemployment insurance.
Together, those provisions would save nearly $250 billion over the next decade, according to a preliminary analysis by the nonpartisan Congressional Budget Office — enough to extend the payroll tax holiday through 2012 and to cut deficits over the next decade by about $110 billion.
Senate Democrats immediately rejected the proposal. “But now that Republicans have reversed their position on this middle-class tax cut, we look forward to working with them to negotiate a consensus solution,” said Adam Jentleson, a spokesman for Senate Majority Leader Harry M. Reid (Nev.).
Negotiations are underway over the tax cut and other year-end measures, such as an extension of emergency unemployment insurance, which also expires Dec. 31.
Senior aides said they hoped to strike an agreement by Dec. 16, when Congress must also approve a new measure to keep the government open through September.
Democrats, for their part, have proposed a 3.25 percent surtax on millionaires to pay for extending and expanding the payroll tax break.
Obama sought to highlight that alternative in Scranton, hammering his rivals for refusing to consider tax increases on the wealthy. It was the president’s second speech on the payroll tax cut in two weeks in a critical electoral swing state, following similar remarks last week in Manchester, N.H.
Speaking in a gymnasium with maroon and gold championship banners on the walls, Obama told the crowd that Republicans have “taken an oath to never raise taxes as long as they live.” But “if they vote no, the typical family’s taxes go up by $1,000 next year.”
“Send your senators a message,” Obama implored. “Tell them: ‘Don’t be a Grinch. Don’t vote to raise taxes on working Americans during the holidays.’ ”