Political clashes coming over budget, payroll tax cut

President Barack Obama's new chief of staff on Sunday stopped short of predicting Congress would agree to extend the payroll tax cut for the rest of 2012.

The issue, a top priority of the Obama administration and the focus of congressional negotiations in recent weeks, reflects the sharp partisan divide permeating Washington as Obama prepares to unveil his 2013 budget proposal on Monday.

Jack Lew, the former White House budget director who just took over as chief of staff, told CNN's "State of the Union" that Congress should resolve the dispute over extending the lower payroll tax rate from 2011.

When pressed about whether a deal would get done, Lew refused to predict success.

"I believe it should get solved, and I know there are people working hard even this weekend trying to solve it," said Lew, who appeared on CNN and four other network and cable talk shows the day before Obama releases his budget plan for next year.

Both the budget proposal and the payroll tax issue continue a political debate over government spending that has dominated Washington since the 2010 congressional elections in which Republicans took control of the House and reduced the Democratic majority in the Senate.

Obama's budget proposal will forecast a $901 billion deficit in 2013, and includes plans to make targeted investments in areas like infrastructure while increasing taxes on the wealthy.

The White House bills the document as a "blueprint for how we can rebuild an economy where hard work pays off and responsibility is rewarded."

Given the intense acrimony in Washington, especially on budget issues, few provisions in the document are likely to become law in an election year.

A protracted political fight in December brought a two-month extension of the lower payroll tax rate from last year, giving Congress more time to work out a longer-term deal.

However, the same political arguments from December continue to stymie talks being held by House and Senate negotiators.

Obama and Democrats are pushing for an extension with no strings attached, while Republicans seek to tie more spending cuts and other priorities to the plan.

House Budget Committee Chairman Paul Ryan, R-Wisconsin, said Sunday he expects a payroll tax deal to emerge, but he questioned the commitment of Democrats to work out a compromise.

"I do believe this will get extended, but when we make offer after offer based on policies that we know Democrats and the president have supported in the past, yet they still insist on not coming to agreement, it's difficult to see exactly how this is going to pan out," Ryan said on the ABC program "This Week with George Stephanopoulos."

On Saturday, Obama used his weekly presidential address to urge Congress to "stop this middle-class tax hike from happening, period."

"No drama. No delay," the president said. "And no ideological side issues that have nothing to do with this tax cut. Now is not the time for self-inflicted wounds to our recovery. Now is the time for common-sense action. And this tax cut is common sense."

Obama encouraged listeners to contact their representatives and urge them to pass the extension.

Lew also counseled a drama-free agreement Sunday.

"We saw in December that it didn't work out so well to have a big, ugly fight over the payroll tax," he told CNN. "We can avoid that. We have enough time for Congress to get its work done."

Last week, Senate Republican leader Mitch McConnell, R-Kentucky, accused Democrats of deliberately undermining the payroll tax talks in order to allow Obama to criticize Republicans for the failure to reach a deal.