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White House Will Deal on Payroll Tax but Not on Defense Cuts

The White House is open to negotiating with Republicans to pass President Barack Obama’s proposed payroll tax cut and other jobs measures, but it won’t allow any changes to the $1.2 trillion in automatic spending cuts as part of the deal.

“It’s off limits,” one senior administration official said today of the cuts triggered by the failure of the super committee to reach a deal to reduce the deficit. Nearly half of those cuts would come from the Defense Department, and Republicans have vowed to roll them back before they go into effect in January 2013.

Negotiations have not yet started, and the White House doesn’t plan on negotiating a deal on its jobs package with Republicans until after the Senate votes this week on the payroll tax cut tied to a millionaire tax, a second senior administration official said.

The first official said they still hope to get the payroll tax cut, an extension of unemployment benefits and some transportation funding before Congress leaves town. Other pieces of the president’s jobs package, including funding for states to hire teachers and firefighters, probably will not be enacted this year, the official acknowledged.

“Right now it appears likely a lot of that stuff isn’t going to get done by the end of the year,” the official said.

Both officials signaled a willingness to negotiate ways to pay for the tax cut. The millionaire tax “is not the line in the sand,” the second official said.

“We will do what is required to land this plan,” the first official said.

A third official signaled last week that the White House was open to a deficit-financed tax cut, one which is not offset by spending reductions elsewhere.

The officials also said it would be a mistake to think the unemployment benefits are a lower priority for the president. They don’t believe that Congress will kick millions off the benefits a week after Christmas and said the president would step up his push for the benefits if it becomes a bigger question. The current federal extension of unemployment benefits is set to expire Jan. 1.

The first aide, meanwhile, said the issue of tax policy “is a strength of the president’s” and said Obama will win on the issue of who voters can trust on taxes.

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