WASHINGTON -- Republican congressional leaders stressed a willingness Wednesday to extend a Social Security payroll tax cut due to expire Dec. 31, setting up a year-end clash with Democrats over how to pay for a provision at the heart of President Barack Obama's jobs program.
"We just think we shouldn't be punishing job creators to pay for it," said Senate Republican leader Mitch McConnell, scorning a Democratic proposal to raise taxes on million-dollar income earners.
Instead, Senate Republicans called for a gradual reduction in the size of the federal bureaucracy, as well as steps to make sure that million-dollar earners don't benefit from unemployment benefits or food stamps.
They also recommended raising Medicare premiums for individuals with incomes over $750,000 a year.
House Speaker John Boehner said that any tax cut extension will be offset by cuts elsewhere in the budget to avoid raising federal deficits.
Numerous Republican officials noted that Obama had said the same thing was true of the plan he unveiled in a nationally televised speech to Congress in September.
The events in Congress, coupled with Obama's fresh appeal for renewal of the payroll tax cut while speaking Wednesday in Scranton, Pa., indicated that leaders in both parties want to seek a compromise less than a week after Congress' high-profile supercommittee failed to find common ground on a related economic issue, a plan to reduce deficits.
Yet nearly a full year before the 2012 elections, it also appeared that lawmakers in both parties are eager to compete for the political high ground before any compromise can be struck on the payroll tax or an extension of unemployment benefits that Republicans also said they might approve.
In a visit to blue-collar northeastern Pennsylvania, Obama warned of a "massive blow to the economy" if Republicans oppose his call for a renewal of the payroll tax cut approved a year ago as a way to stimulate economic growth.
"Are you going to cut taxes for the middle class and those who are trying to get into the middle class, or are you going to protect massive tax breaks for millionaires and billionaires?" he said, referring to Republicans.
"Are you going to ask a few hundred thousand people who have done very, very well to do their fair share, or are you going to raise taxes for hundreds of millions of people across the country?"