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WASHINGTON | Wed Dec 14, 2011 1:46pm EST (Reuters) - The United States on Wednesday faced the prospect of an imminent government shutdown for the third time this year as a year-end fight between Republican and Democratic lawmakers in Congress over taxes and spending turned nastier.
Democrats, led by President Barack Obama, are refusing to sign off on a bipartisan $1 trillion government funding bill that would keep federal agencies operating beyond Friday. They first want Republicans to agree to a compromise deal to extend a payroll tax cut for 160 million Americans.
The Republican-led House of Representatives passed its version of the payroll tax cut bill along a mostly party-line vote on Tuesday, but Democratic Senate Majority Leader Harry Reid has vowed to kill it as soon as he can bring it to a vote.
The Republican bill proposes to pay for the $120 billion cost of the payroll tax cut largely by freezing federal pay and shrinking the size of the government work force. Democrats reject that and are instead proposing a surtax on millionaires.
Republicans in the Senate blocked a Democratic bid on Wednesday to quickly reject the House bill, which also includes a provision to speed up a decision on an oil pipeline that the White House has delayed for further environmental studies.
Senate Republican leader Mitch McConnell stymied Reid's effort to dispose of the Republican bill, saying he wanted to turn first to the government funding bill.
In an exchange on the Senate floor, Reid objected to McConnell's move, insisting the payroll tax bill first be considered.
With just days left to resolve the crisis, both parties are locked in a complex legislative dance as they try to out-maneuver each other for political advantage in a high-stakes battle that will likely carry over into the 2012 presidential and congressional elections.
Leaders of both parties fear a voter backlash in 2012 if the tax relief measure is not renewed. Public confidence in Congress plunged to new lows this year after a series of battles over tax and spending pushed the country to the brink of default and cost it its coveted AAA credit rating by one rating agency.
(Writing by Ross Colvin, additional reporting by Matt Spetalnick and Caren Bohan; Editing by Vicki Allen
© 2010 Thomson Reuters.
