Obama pushes to extend reduction in payroll tax

Virginia Gov. Bob McDonnell

NEW YORK -- President Barack Obama on Saturday urged Congress to extend a payroll-tax cut, with the clock ticking on the time remaining for lawmakers to act or have taxes rise for millions of working Americans.

"If Congress refuses to act, middle-class taxes will go up. It's that simple," Obama said in his weekly radio and Internet address about the tax cut, which expires at the end of February and amounts to roughly $1,000 a year for the typical family, or $40 a paycheck.

In December, lawmakers agreed on a two-month extension of the tax cut. Legislation to extend it also would renew jobless benefits for the long-term unemployed and stop a 27 percent reduction in Medicare payments to physicians.

The measure would cost more than $150 billion, and Congress needs to figure out how to cover the expenditures.

In the Republican reply, Virginia Gov. Bob McDonnell targeted Obama's not-yet-released budget, saying the president's fiscal plan likely would impede job creation with a tax hike while not addressing the nation's debt.

"We can expect that this will not be a proactive budget built to promote fiscal responsibility and future prosperity. Rather, it appears we'll see a bloated budget that doubles down on the failed policies of the past," said McDonnell.

Obama's budget, to be released Monday, would let Bush-era tax cuts for Americans at the high-end of the tax brackets expire.

It is also expected to request the elimination of corporate tax loopholes in addition to reduced corporate tax rates.