Democrats may jettison their demand for higher taxes on millionaires as part of legislation to extend payroll tax cuts for most Americans, officials said today. The move comes as President Obama and Congress struggled to clear critical year-end bills without triggering a partial government shutdown. Republicans, too, signaled an eagerness to avoid gridlock and adjourn for the holidays. With a massive, $1 trillion funding bill blocked by Democrats, GOP lawmakers and aides floated the possibility of a backup measure to keep the government in operation for several days after the money runs out Friday night.
Democrats have made the proposed tax on income over $1 million central to their plan for the payroll tax cut extension, and officials stressed no decision had been made on whether to drop it. They spoke on condition of anonymity. Any such move would represent a concession to the Republicans in both houses who are opposed to the surtax. But it could also require Democrats to agree to politically painful savings elsewhere in the budget to replace the estimated $140 billion the tax would have raised over a decade. (Read more Congress stories.)