US & Canada

Payroll tax cut: Obama urges Republican compromise

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Media captionPresident Barack Obama: "I am ready to sign a compromise"

US President Barack Obama and House leaders remain deadlocked over a deal to extend a payroll tax cut due to expire at the end of the year.

In a statement, Mr Obama blamed lack of progress on a Republican "faction".

He also told House Speaker John Boehner by phone that he would begin talks on a full-year deal as soon as the House passed an interim bill.

Mr Obama has postponed a family trip to Hawaii, saying he will not leave Washington until a deal is struck.

If Congress fails to act, an estimated 160 million Americans will see their payroll taxes rise on 1 January 2012.

The president said that conservatives in the House of Representatives were blocking passage of a bill that most Democrats and Republicans had agreed to.

"This is exactly why people get so frustrated with Washington," Mr Obama said.

He accused those who oppose the deal of not appreciating how important the tax credit would be to American workers.

Surrounded by a group of supporters, the president read out messages from voters who said the tax credit would help them pay their heating bills, visit elderly relatives and treat their families to pizza dinners.

Greater certainty

Mr Obama warned that failure to pass an extension of the measures would hit the overall economy, as well as individual families.

He referred to recent, encouraging economic data that he said could be reversed by a rise in their take-home income.

The president highlighted the words of Senate Minority Leader Mitch McConnell, the chamber's top Republican, who broke his silence on Thursday to urge House Republicans to back the two-month extension.

That plan was approved in the Senate on Saturday by an overwhelming majority of 89-10.

Passage of the interim deal would also set the clock ticking for the White House to make a decision on the disputed Keystone XL pipeline project from Canada to the US Gulf Coast, he said.

Mr McConnell also called on Senate Majority Leader Harry Reid to appoint negotiators to work on a year-long extension of the measures.

"House Republicans sensibly want greater certainty about the duration of these provisions, while Senate Democrats want more time to negotiate the terms.

"These goals are not mutually exclusive. We can and should do both."

Mr McConnell's comments break days of silence from Senate Republicans on the standoff unfolding in Washington.

Economic stimulus

In an exchange of phone calls with the president on Thursday, Mr Boehner refused to compromise on his position, instead calling on the president to send economic aides to a Capitol Hill negotiating table.

He has argued that a two-month extension of the measures would not give certainty to job-creators, preferring to extend the tax holiday for a full year.

"The fact is, we can do better. Americans are still asking the question, where are the jobs?" he said.

But Republicans and Democrats have been unable to agree on how to fund a year-long extension of the payroll tax cut.

Some conservative Republicans were initially sceptical about extending the payroll tax measure, which economists have said would provide some stimulus to the fragile economic recovery.

The deal would also extend benefits for the long-term unemployed and put off harsh cuts to doctors' Medicare fees.

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