Payroll tax vote blocked by Senate leaders. Bad sign?

Congressional negotiations over a bill extending a payroll tax cut and unemployment benefits can begin as soon as the Senate rejects a version the House approved despite a White House veto threat, the Senate's top Democrat said Wednesday.

Senate Majority Leader Harry Reid wants his chamber to vote quickly on the House payroll tax bill, which includes Democratic-opposed spending cuts and language speeding work on an oil pipeline, to demonstrate how little support it has in the Senate. That could strengthen his hand in talks with House Speaker John Boehner, R-Ohio, over a compromise.

"The sooner we put this useless partisan charade behind us, the sooner we can negotiate a true bipartisan solution that protects middle-class workers" from a payroll tax increase, said Reid, D-Nev.

But Senate Minority Leader Mitch McConnell, his opposite number, refused Wednesday to let the chamber vote quickly on the House measure. The Kentucky Republican said the Senate should first vote on legislation financing the federal government, because a temporary bill keeping agencies open expires on Saturday, threatening a government shutdown.

"We ought to finish our most immediate concern first," McConnell said, adding that Reid should start negotiating with Boehner on the payroll tax bill immediately.

Reid would not allow a vote on the spending bill. Democrats worry that if Congress passes that measure first, it would ease pressure on Republicans to reach compromise on the payroll tax legislation.

The House payroll tax measure would keep 160 million workers from seeing their payroll tax jump on Jan. 1 from this year's 4.2 percent back to its normal level of 6.2 percent — a $1,000 difference for a family making $50,000.

It would also renew expiring extra benefits for long-term jobless people and head off a cut in doctors' Medicare reimbursements, a reduction that could prompt some to stop seeing elderly patients who use that program.

But it has drawn nearly universal Democratic opposition because it would also force work to begin on the 1,700-mile-long Keystone XL oil pipeline, which President Barack Obama would rather postpone. It would also trim federal spending without forcing the wealthy to contribute as much as Democrats want.

Boehner taunted Senate Democrats Tuesday after the House passed its legislation.

"The Senate can take up our bill, they can pass it, they can amend it, they can move their own bill," he told reporters, standing beside a video clock counting down the seconds until the payroll tax boost that would otherwise occur Jan. 1. "But it is time for the Senate to act. Democrats who run the United States Senate can't continue to hide and sit on the sidelines."

Boehner also said that when the Senate acts, "we'll begin to then take a look at where we can find common ground."

The payroll measure isn't the only one lawmakers plan to tackle before beginning their year-end vacation, presumably before Christmas.

Bipartisan lawmakers have reached agreement on a $1 trillion measure financing scores of government agencies through next September, a bill that would avert a federal shutdown this weekend when temporary funding expires.

Democrats, though, are refusing to let the legislation move through Congress until the two parties broker a deal on the payroll tax measure. Democrats hope that will build pressure on Republicans to quickly reach agreement on the payroll tax bill, a tactic Boehner called "outrageous."

The House planned to debate a $662 billion defense bill on Wednesday that charts policy for military personnel, weapons systems and the wars in Iraq and Afghanistan, plus national security programs in the Energy Department. House and Senate negotiators wrapped up the bill Monday night after including revisions that address administration concerns over handling of terrorism suspects.

The bill would require that the military take custody of a suspect deemed to be a member of al-Qaida or its affiliates who is involved in plotting or committing attacks on the United States, with an exemption for U.S. citizens. The legislation also would deny some suspected terrorists, even U.S. citizens seized within the nation's borders, the right to trial and subject them to indefinite detention.

Also Wednesday, the Senate defeated dueling Republican and Democratic proposals to amend the Constitution to require a balanced federal budget, falling well short of the two-thirds majorities required.

Republicans say work on the Keystone oil pipeline, proposed to run from the tar sands of Alberta, Canada, to Texas oil refineries, would create 20,000 or more jobs. Opponents say the real figure is more like 3,500.

Obama cited a need for studies of how the pipeline could avoid harming fragile lands in Nebraska when he announced last month that work would be delayed until after next year's elections. The GOP bill would give the president 60 days to act or the needed work permit would be automatically granted.

Another provision that Republicans say would create jobs would derail a proposed federal environmental rule aimed at curbing some industrial pollution.

To cover the payroll tax bill's overall cost, which exceeds $180 billion, the measure ignores Democratic proposals to slap a surtax on people earning more than $1 million annually.

Instead, Republicans would raise the money by continuing a pay freeze on civilian federal workers and requiring them to contribute more to their pensions; making higher-earning seniors pay steeper premiums for Medicare; cutting funds from Obama's 2010 health care overhaul; raising some federal fees; and selling portions of the broadcast spectrum.

The Senate version of the payroll tax legislation may also renew some tax provisions that would otherwise expire Jan. 1, including one providing tax breaks to mass transit commuters.