Government Shutdown Looms as US Tax Fight Gets Nastier

The U.S. faced the prospect of an imminent government shutdown for the third time this year, as a year-end fight between Republican and Democratic lawmakers in Congress over taxes and spending turned nastier.

Democrats, led by President Barack Obama, are refusing to sign off on a bipartisan $1 trillion government funding bill that would keep federal agencies operating beyond Friday. They first want Republicans to agree to a compromise deal to extend a payroll tax cut for 160 million Americans. The Republican-led House of Representatives passed its version of the payroll tax cut bill along a mostly party-line vote Tuesday, but Democratic Senate Majority Leader Harry Reid has vowed to kill it as soon as he can bring it to a vote.

The Republican bill proposes to pay for the $120 billion cost of the payroll tax cut largely by freezing federal pay and shrinking the size of the government work force. Democrats reject it and are instead proposing a surtax on millionaires. More...