President Obama set to fight to extend workers’ payroll tax break

After achieving a modest rebound in his approval rating this fall, President Obama is headed for a high-profile fight with Republicans over how best to preserve a tax break for American workers.

This time, White House aides insist, the president has the upper hand.

During the late summer, as the debt ceiling debate dragged on, Obama was repeatedly thwarted by congressional Republicans and his approval rating dropped below 40% in some polls. Since then, as he kept a distance from Congress, his slide has halted and his rating has edged up to the mid-40s. Repeated polls show he is less tainted in the public’s eyes than members of Congress, whose approval ratings have dropped below 10%.

That’s not huge progress, but Obama’s advisors believe it shows he has benefited from the tougher approach he has taken since September — frequently leaving Washington to subject lawmakers to public pressure.

His advisors concede, though, that the strategy of largely avoiding Congress has had a cost. Republicans aim to portray Obama as a weak leader who is too passive to deserve a second term, and they’ve been using the failed efforts to work out a long-term deal on the federal deficit as an example.

Instead of making tough decisions on spending, Obama has settled for a “kick-the-can-down-the-road strategy,” said Phil Musser, a GOP political consultant. “Whoever the Republicans nominate should make strong executive leadership part of the central thesis of the campaign to replace him.”

All of these factors set up a complicated dynamic for the coming fight over continuing the 2% payroll tax holiday.

Obama allies believe he needs a win on the issue to defuse the “weak leadership” assertion. Republicans are loath to give him a victory. Some Republicans argue that the tax break must be offset by spending cuts to avoid widening the deficit. Obama has proposed a surtax on people earning $1 million or more to cover the cost.

But White House officials think Obama has leverage because none of the players — Democrats or Republicans — wants to allow the tax break to expire on Jan. 1 and suffer the fallout as employees see their paychecks shrink in tough times. Many economists predict that allowing the tax cut to end would hinder the fragile recovery, estimating it could cut in half the already weak economic growth forecast for 2012.

The White House has attacked a “do-nothing Congress,” saying Republicans are so focused on hurting Obama’s reelection prospects that lawmakers are willing to block proposals that would boost the economy and lower unemployment. The administration wants to paint Republicans as determined to protect the wealthy from any tax increase, no matter the reason.

Obama plans to spend much of December pushing for renewal of the payroll tax cut and extension of unemployment insurance benefits. He will kick off the effort with an appearance Wednesday in Scranton, Pa. — swing territory in a state that Obama must carry in 2012 if he is to win reelection.

“He’s going to put a lot of effort into making sure everyone in the country is aware” that the payroll tax cut will expire at the end of the year unless Congress acts, a senior White House official said Monday, speaking on condition of anonymity so that he could discuss strategy. “We will travel, we will do interviews, we will do events.”

Asked whether Obama might give a prime-time televised speech to the nation, the official said: “If [the TV networks] give us the time, we’ll take it.”

If negotiations with Republican leaders require Obama to take part in face-to-face talks, he may call off the road show so that he is available for meetings at the White House. But Obama aides have made it clear that they do not believe such closed-door sessions with lawmakers are the best use of the president’s time.

Looking back on the failure of the congressional “super committee” to reach a deal on reducing the government’s long-term deficit, the senior White House official defended the decision to stay out of that process. The president would have been forced to “sit at a table with these guys who have approval ratings slightly greater than the Ebola virus and talk about deficits with them all day long and still fail,” the senior administration official said.

Unlike the super committee’s prospects, extending the payroll tax cuts stands a chance of passage in some form, which gives the president a strong incentive to wade in more directly.

“They’re going to have to get there,” the White House official said of congressional Republicans. “It’s just a question of whether they’re going to do it the easy way or the hard way.”

To counter Republican arguments that his proposals will increase the deficit, Obama will seek to link the payroll tax cut with an increase in taxes for millionaires. But making the tax cut “deficit neutral” appears to be a lower priority than getting a deal that will keep taxes from going up. Another failure, officials concede, would reinforce the widespread view that Washington dysfunction persists three years into Obama’s presidency.

“Obviously, the president is part of Washington and the leader of his party,” said a second senior White House aide, who also spoke on condition of anonymity so he could discuss strategy. “So people’s low regard for Washington has an impact on him.”

cparsons@latimes.com

peter.nicholas@latimes.com