Republicans Push for Action on Payroll Tax

(Reuters) - Republicans expressed frustration Thursday at the slow pace of negotiations over extending a tax break for workers that expires at the end of the month, accusing President Barack Obama and Senate Democrats of blocking agreement.

House Speaker John Boehner, the top Republican in Congress, said negotiators needed to get moving to reach agreement on how to pay for the roughly $170 billion package for a full year.

Right now, the only ones blocking an agreement are the Senate Democrats and the president, Boehner said at a news conference. It's time for them to act.

Failure to strike a deal would mean an effective tax hike on 160 million workers in an election year, dealing a blow to a U.S. economy that has shown unexpected strength in recent weeks. The tax break provides an extra $1,000 for an average family.

A Democratic aide dismissed the Republican charges, saying the party was making a real effort to get a deal.

Negotiators are deadlocked over how to cover the cost of the legislation. Both sides have been reluctant to make any real concessions on Democrats' demands for tax increases on wealthier Americans and Republicans' push for spending cuts, as they try to outmaneuver each other for political advantage.

It is the same dispute that prevented lawmakers from reaching agreement in December on extending the tax cut through the 2012 election year.

Democrats offered on Thursday to scale back unemployment insurance benefits to 93 weeks from 99. Republicans, who want them cut to 59 weeks, swiftly rejected the proposal.

Democrats believe they have the advantage in the talks and are reluctant to make significant concessions unless they see a willingness by Republicans to soften their central demand for the package to be paid for entirely with spending cuts.

The No. 2 Republican in the House, Eric Cantor, said Republicans would like talks wrapped up by the end of next week when Congress will go on a weeklong break. But Boehner said separately he did not want to set any deadlines.

The current two-month extension expires on February 29. If Congress fails to act, the 4.2 percent tax workers pay for the Social Security retirement fund will snap back to 6.2 percent.

Some economists worry that failing to extend the payroll tax cut could slow already sluggish U.S. economic growth by as much as 1 percentage point this year.

The tax cut package also includes extending jobless benefits for the long-term unemployed and the cost of averting a 27 percent pay cut for doctors treating elderly Medicare patients.

Election-year politics have complicated the search for a deal on how to pay for the tax cut package. The Republican plan calls for a premium increase for upper-income Medicare patients that has been rejected by Democrats, who are likely to use protecting the Medicare as a campaign issue.

Republicans, want to protect their tax-cutting image and rejected a Democratic proposal to impose an extra 1 percent tax on incomes over $1 million.

(Additional reporting by Thomas Ferraro; Editing by Peter Cooney)