WASHINGTON — The Senate on Thursday rejected dueling partisan proposals to slash federal payroll taxes for 160 million Americans, while House Republicans trotted out a new, more conservative plan that sought to link the tax issue to other GOP priorities.
With an end-of-year deadline looming and lawmakers eager to wrap up legislative business so they can leave Washington for the Christmas holiday, Congress is headed to a showdown over the payroll issue next week, when it must also approve an expansive spending measure to keep the government humming past Dec. 16.
If Congress does not resolve the issue by the end of the month, the payroll tax rate paid by employees will revert next year to 6.2 percent, instead of the 4.2 percent that has been in place for the past year.
President Barack Obama has urged Congress to push the rate even lower, to 3.1 percent, so workers can retain more of their pay to spend in the weak economy. He said Thursday he will delay the scheduled Dec. 17 start of his Christmas vacation in Hawaii if needed to get a deal.
Despite the time crunch, the House and Senate concluded work for this week with little sign of compromise.