Obama urges Congress to pass payroll tax cut (Reuters)

(Reuters) ? President Barack Obama on Thursday urged Congress to promptly renew a payroll tax cut and long-term unemployment benefits, saying the measures were essential to the health of the U.S. economy.

As congressional negotiators hurriedly searched for compromises on these bills, as well as a nearly $1 trillion spending measure to keep the government operating beyond Friday, Obama warned Congress not to leave for a holiday break without finishing its business.

"Congress should not and cannot go on vacation before they have made sure that working families aren't seeing their taxes go up by $1,000 and those who are out there looking for work don't see their unemployment insurance expire," Obama said at the White House.

The payroll tax cut that is set to expire on December 31 would give 160 million Americans about $1,000 a year in additional spending power, possibly helping the economy grow.

And with a stubbornly high unemployment rate now at 8.6 percent, extending long-term benefits for another year would help millions more. Without action by Congress, these benefits will begin expiring early in 2012.

After weeks of stuck negotiations and political bickering, Senate leaders on Thursday said they were optimistic that a bipartisan compromise was nearly at hand on payroll tax and government spending bills that could demonstrate to voters that Washington is able to function cooperatively - at least right now.

Senate Majority Leader Harry Reid, a Democrat, opened Thursday's session of the Senate saying that "in the next few days" the legislation could be wrapped up, allowing lawmakers to go home for the holidays after a year of bruising fights over budget and tax policy.

Senate Republican leader Mitch McConnell was similarly upbeat, saying he was "confident and optimistic we'll be able to resolve both (bills) on a bipartisan basis."

The positive assessments - the first in weeks - came a day after Reid, McConnell and House of Representatives Speaker John Boehner huddled in the Capitol to talk about a way forward.

After meeting President Barack Obama on Wednesday night, Senate Democrats also backed down on their demand for a surtax on income over $1 million to pay for the payroll tax cut. McConnell downplayed the importance of the Democratic overture.

With government funds for a variety of federal programs running out at midnight on Friday, Boehner told reporters, "There is no need to shut down the government."

But House Democratic leader Nancy Pelosi said that was still a possibility. She said there could be a need for a stopgap spending bill to avoid the first government closings since late 1995 and early 1996.

A senior Senate Democratic aide said that Senate staffers from both parties were negotiating the nuts-and-bolts of possible deals throughout the day.

"By the end of the day we should have a good sense of whether we're on the compromise track or the train wreck track," the aide said.

(Reporting by Richard Cowan; Additional reporting by Rachelle Younglai, Thomas Ferraro, Donna Smith and Caren Bohan; Editing by Cynthia Osterman; )

Source: http://us.rd.yahoo.com/dailynews/rss/economy/*http%3A//news.yahoo.com/s/nm/20111215/ts_nm/us_usa_taxes

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