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White House rejects Republican payroll tax proposal

by
U.S. President Barack Obama speaks in the Rose Garden of the White House in Washington
U.S. President Barack Obama speaks in the Rose Garden of the White House in Washington

WASHINGTON (Reuters) - The White House rejected on Friday the latest proposal from Republicans in Congress on a payroll tax cut, saying its costs needed to be offset in a balanced away and not with budget cuts exempting the rich.

"We are open to looking at other ways to pay for this, but they have to be economically responsible and fair," White House spokesman Jay Carney said. "It is important that the overall package meet the standards the president has set."

Republicans have proposed that the payroll tax cut be paid for with an extension of a pay freeze for federal workers, changes to civilian federal retiree benefits and other reforms, including gradual increases in Medicare health premiums for the elderly and a clampdown on assistance to illegal immigrants.

They have also sought to tie the payroll tax extension - a key component of President Barack Obama's $447 billion set of proposals to boost hiring - to the approval of TransCanada's Keystone XL pipeline, which would transport Canadian oil to Texas.

The State Department has delayed a decision on that project until 2013 to give more time to address environmental concerns and to study an alternate route for the pipeline. Republicans have accused Obama of pushing for that delay for political reasons to avoid upsetting his Democratic base ahead of the November 2012 presidential vote.

Carney stressed it was important to separate the Keystone issue from the payroll tax question and said lawmakers in Congress ought to make it a priority to avoid having taxes go up on the middle class at the end of the year.

He also said Obama was willing to stay in Washington through Christmas, instead of going to Hawaii as planned, in order to get the tax cut extended.

(This story corrects the pipeline name in the fourth paragraph.)

(Reporting by Laura MacInnis; Editing by Jackie Frank)

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