WASHINGTON: The White House and lawmakers held frantic talks to ease a pre-Christmas standoff Thursday, seeking to avoid a government shutdown which could further undermine public confidence in American leaders.
President Barack Obama's Democrats and his Republican foes appeared to step back from the brink, seeking to avoid a situation in which the machinery of government would grind to a halt on Friday after running out of money.
Obama said there was "no reason the government should shut down over this," but warned lawmakers they must agree to his demands to extend a payroll tax cut and extend unemployment benefits to workers.
"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 looking for work don't see their unemployment insurance expire," he said.
Republican House of Representatives Speaker John Boehner agreed there was "no need to shut down the government."
"I think everyone needs just to step back and take a deep breath. There is an easy way to untangle all of this," said Boehner.
The root of the stalemate lies in brinkmanship by both parties over Obama's push for a $1,500 tax cut for 160 million workers and a Republican bid to force him to reconsider delaying a decision on a Canada-US pipeline plan.
These rows have held up a $1 trillion bill which would fund the government through fiscal year 2012 which must be passed by Friday, before federally funded Christmas events, public buildings and government agencies go dark.
The White House said late Wednesday it had some difficulties with the spending bill, but Senate Majority leader Harry Reid said Thursday that he believed they could be ironed out.
"We hope we can come up with something that would get us out here at a reasonable time in the next few days," Reid said.
Brinkmanship is nothing new for Congress in the dying hours of a session. But the current showdown is particularly bitter, driven by pre-positioning for Obama's 2012 reelection bid and deep antipathy between the parties.
The latest grandstanding came as a new poll showed that public discontent with Congress was at a record high, with two-in-three voters saying most lawmakers should be kicked out of office in 2012.
Forty percent of respondents to the Pew Research Center poll blamed Republicans for the impasse in Congress, compared to 23 percent who fingered Democrats.
Republican leaders accuse Obama of ordering Democrats to hold up the massive spending measure to build leverage for his demands for the extension to a payroll tax cut designed to stimulate the economy.
Democrats fear that the House could endorse the spending plan, then simply leave town, without taking up a yet to be passed Senate version of the payroll tax cut extension.
Such a move would saddle American workers with a $1,000 tax hike next year, which analysts say could hurt the economy.
But Boehner on Thursday suggested room for negotiation on the issue.
"If the Senate acts, I am committed to bringing the House back," he said.
It also became clear that the White House will not get its wish for the payroll tax cut extension to be paid for by a surcharge on millionaires.
Democratic aides signaled the plan was no longer on the table, though Boehner dismissed the idea the move was a concession, arguing Obama was always unlikely to have sufficient votes on Capitol Hill to pass it.
Payroll taxes are separate from income taxes and extracted from workers' pay packets to fund the social security retirement system. Obama says extending the tax cut gets money into the pockets of poorer workers most likely to spend it.
Democrats are also complaining that Republicans acted in bad faith by attaching a measure to the payroll tax bill requiring Obama to reconsider delaying the Keystone XL pipeline from Canada's tar sands through the US heartland.
Obama has put off a decision on the pipeline until after the election as it has whipped up a political storm and played off environmentalists and union leaders in his own voting base.
Republicans however say the project could produce 20,000 jobs at a time of deep economic pain and are accusing Obama of political pandering.
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