Congress leaders hope deal near on gov't shutdown

By ALAN FRAM, Associated Press

WASHINGTON (AP) — Shifting from confrontation to cooperation, congressional leaders expressed optimism Thursday that agreement was near on extending this year's payroll tax cut, renewing unemployment benefits and averting a federal shutdown.

"We can extend payroll tax relief for American workers and create new jobs and keep the government running and, frankly, we can do it in a bipartisan way," House Speaker John Boehner, R-Ohio, told reporters, a turnabout from weeks of partisan sniping from both sides.

"No more show votes," Boehner said after praising earlier remarks by Senate Majority Leader Harry Reid, D-Nev., that lingering disagreements on a mammoth spending bill could be easily resolved. "It's just time to legislate."

Reid opened the Senate's morning session by saying he and the chamber's top Republican have held talks to resolve remaining disputes. With lawmakers itching to return home before the holidays, Reid said he and Senate Minority Leader Mitch McConnell, R-Ky., hope they can reach a deal "that would get us out of here in a reasonable time, in the next few days."

Standing just across the aisle, McConnell agreed with Reid - a stark contrast to recent days, when the two have fired sharp partisan volleys at each other.

"We're confident, optimistic we'll be able to resolve both on a bipartisan basis," said McConnell, referring to one bill that would renew the payroll tax cut and jobless benefits, and a separate spending measure that would keep federal agencies open.

President Barack Obama applied pressure of his own, saying Congress "should not and cannot" go home until it had resolved the issues.

"There's no reason why we shouldn't be able to extend these items, the payroll tax cut, u.i. before holidays," he said, using the abbreviation for unemployment insurance. "There's no reason the government should shut down over this, and I expect all of us to do what's necessary in order to do the people's business and make sure that it's done before the end of the year."

In part, the turnabout reflected the calendar: 160 million Americans would get a sudden tax increase on Jan. 1 if the payroll tax cut was not renewed, and most government agencies would close this Saturday without agreement on spending legislation.

The drive to broker agreements also underscored a sense that weeks of partisan battling, in which each party accused the other of causing tax increases and a federal shutdown, had finally run their course.

"We've done enough back-and-forth, the Republican leader and me, staking out our positions, and our positions are fairly clear to the American people," Reid said.

A clear sign of movement came late Wednesday, when aides said Democrats were abandoning their demand for a surtax on millionaires to help finance payroll tax cuts.

Like congressional leaders, White House press secretary Jay Carney also expressed optimism Thursday about bipartisan compromise. "We believe a deal can get done," he said.

Though Obama has said repeatedly the wealthy need to "pay their fair share," Carney said the White House was open to other ways to pay for unemployment benefits and the payroll tax cut, and he downplayed what had been a key Obama argument.

"The president's priority has not been how it's paid for or raising taxes. It's been lowering taxes for the vast majority of Americans," Carney said.

On a separate spending dispute, House Republicans had said Wednesday night that they would try pushing a massive $1 trillion spending bill through the House on Friday, relying only on GOP votes, to prevent a federal shutdown. Reid said Thursday that he believed remaining partisan disputes on that bill could be quickly settled.

The pre-Christmas wrangling caps a contentious year in a capital hindered by divided government, with Democrats controlling the White House and Senate while Republicans run the House. Lawmakers have engaged in down-to-the-wire drama even when performing the most mundane acts of governing, such as keeping agencies functioning and extending federal borrowing authority, tasks that are only becoming more politically delicate as the calendar nears the 2012 election year.

The GOP-run House approved its version of a payroll tax cut bill this week, but it drew solid opposition from Democrats and Obama in part because it would force work on the Keystone XL oil pipeline from western Canada to Texas Gulf Coast refineries, which Obama would rather delay. They are also unhappy that the bill is financed by cuts to civilian federal workers, Obama's health care overhaul bill and other programs that Democrats say would avoid meaningful contributions from the rich.

In one instance of cooperation, the Senate was expected to give final congressional approval Thursday to a $662 billion defense bill that would allow the administration to prosecute terrorism suspects in the civilian justice system.

The White House had initially issued a veto threat against the bill over language requiring the military to handle some terrorism suspects. An agreement was reached by including a provision ensuring that the role of domestic law enforcement agencies would be unchanged.

The spending bill would finance the Pentagon and nine other Cabinet-level departments, as well as scores of smaller agencies. It would trim the budgets of the Environmental Protection Agency, foreign aid and Congress itself while providing funds to combat AIDS in Africa, patrol the U.S.-Mexico border, operate national parks and boost veterans' health care.

(Copyright 2011 by The Associated Press. All Rights Reserved.)