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Updating: 12:48, 15 December 2011 Thursday
US President Barack Obama speaks to a Democratic National Committee event in Washington, DC, USA, on 13 December.(EPA)
US Democrats mull dropping millionaire surtax
One aide said Democrats have not offered to drop the surtax, but have made it clear to Republicans that they are willing to do so to renew the tax cut set to expire on Dec. 31.
President Barack Obama and fellow Democrats on Wednesday signaled a willingness to drop a proposed surtax on millionaires, but remained at odds with Republicans in efforts to extend an expiring payroll tax cut for 160 million Americans.
Obama discussed abandoning the surtax, which Republicans have denounced as a levy on "job creators," at a meeting with Senate Majority Leader Harry Reid and other top Senate Democrats at the White House, party aides said.
One aide said Democrats have not offered to drop the surtax, but have made it clear to Republicans that they are willing to do so to renew the tax cut set to expire on Dec. 31.
"We made a significant step in their direction, but Republicans don't seem to care whether a tax increase for the middle class is prevented -- so we remain at a standoff," the aide said. "They are not negotiating."
The tough talk comes amid an end-of-year rush in Congress to find deals on major initiatives beyond the payroll tax cut extension, including one to extend benefits for millions of long-term jobless Americans. Those government payments would begin expiring early next year.
Democrats and Republicans are also fighting over a nearly $1 trillion spending bill to keep several government agencies operating through the fiscal year that ends on Sept. 30.
Without action by Friday at midnight, agencies that deliver health, education, defense, homeland security and other services would have to close, further eroding sagging public confidence in members of Congress who face re-election next year.
Given the lack of progress, the White House called on Congress to pass a short-term funding measure to avert a shutdown. It was not yet clear if lawmakers will comply.
Without elaborating, House Republican Leader Eric Cantor told reporters, "We intend to act to make sure that we don't allow for there to be a shutdown."
But many lawmakers are frustrated with the political gridlock that has plagued a sharply-divided Congress all year.
"That is the kind of stuff that is driving the American people bat crazy right now," said Democratic Senator Claire McCaskill.
Progress unclear
Without action by the end of this month, the payroll tax would revert to 6.2 percent from the current 4.2 percent, resulting in an average increase of $1,000 per family. Independent economists have warned that could hurt the country's fragile economic recovery.
Any setback for the economy would hurt Obama's re-election chances next November, as he is already struggling in the polls because of voter frustration with high unemployment.
Many Republicans initially were cool to renewing the payroll tax cut, questioning its effectiveness in stimulating a weak economy. But their leaders eventually embraced it as they also looked for ways to attach new job-creation measures.
Democrats have proposed a 1.9 percent surtax on income over $1 million annually to help cover the $120 billion cost of extending the workers' payroll tax cut for another year. Republicans instead favor extending a pay freeze on federal workers, cutting their pensions and other savings.
Senate Republican Leader Mitch McConnell brushed off the importance of the surtax possibly being dropped.
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US President Barack Obama speaks to a Democratic National Committee event in Washington, DC, USA, on 13 December.(EPA)
US Democrats mull dropping millionaire surtax
One aide said Democrats have not offered to drop the surtax, but have made it clear to Republicans that they are willing to do so to renew the tax cut set to expire on Dec. 31.
President Barack Obama and fellow Democrats on Wednesday signaled a willingness to drop a proposed surtax on millionaires, but remained at odds with Republicans in efforts to extend an expiring payroll tax cut for 160 million Americans.
Obama discussed abandoning the surtax, which Republicans have denounced as a levy on "job creators," at a meeting with Senate Majority Leader Harry Reid and other top Senate Democrats at the White House, party aides said.
One aide said Democrats have not offered to drop the surtax, but have made it clear to Republicans that they are willing to do so to renew the tax cut set to expire on Dec. 31.
"We made a significant step in their direction, but Republicans don't seem to care whether a tax increase for the middle class is prevented -- so we remain at a standoff," the aide said. "They are not negotiating."
The tough talk comes amid an end-of-year rush in Congress to find deals on major initiatives beyond the payroll tax cut extension, including one to extend benefits for millions of long-term jobless Americans. Those government payments would begin expiring early next year.
Democrats and Republicans are also fighting over a nearly $1 trillion spending bill to keep several government agencies operating through the fiscal year that ends on Sept. 30.
Without action by Friday at midnight, agencies that deliver health, education, defense, homeland security and other services would have to close, further eroding sagging public confidence in members of Congress who face re-election next year.
Given the lack of progress, the White House called on Congress to pass a short-term funding measure to avert a shutdown. It was not yet clear if lawmakers will comply.
Without elaborating, House Republican Leader Eric Cantor told reporters, "We intend to act to make sure that we don't allow for there to be a shutdown."
But many lawmakers are frustrated with the political gridlock that has plagued a sharply-divided Congress all year.
"That is the kind of stuff that is driving the American people bat crazy right now," said Democratic Senator Claire McCaskill.
Progress unclear
Without action by the end of this month, the payroll tax would revert to 6.2 percent from the current 4.2 percent, resulting in an average increase of $1,000 per family. Independent economists have warned that could hurt the country's fragile economic recovery.
Any setback for the economy would hurt Obama's re-election chances next November, as he is already struggling in the polls because of voter frustration with high unemployment.
Many Republicans initially were cool to renewing the payroll tax cut, questioning its effectiveness in stimulating a weak economy. But their leaders eventually embraced it as they also looked for ways to attach new job-creation measures.
Democrats have proposed a 1.9 percent surtax on income over $1 million annually to help cover the $120 billion cost of extending the workers' payroll tax cut for another year. Republicans instead favor extending a pay freeze on federal workers, cutting their pensions and other savings.
Senate Republican Leader Mitch McConnell brushed off the importance of the surtax possibly being dropped.
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