WASHINGTON – Republican congressional leaders stressed a willingness Wednesday to extend a Social Security payroll tax cut due to expire Dec. 31, setting up a year-end clash with Democrats over how to pay for a provision at the heart of President Obama’s jobs program.

“We just think we shouldn’t be punishing job creators to pay for it,” said Senate Republican leader Mitch McConnell, scorning a Democratic proposal to raise taxes on million-dollar income earners.

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House Speaker John Boehner, R-Ohio, holds a document labeled “America’s Job Creators” while talking to the media after a Capitol Hill meeting Wednesday. The Associated Press

Instead, Senate Republicans called for a gradual reduction in the size of the federal bureaucracy, as well as steps to make sure that million-dollar earners don’t benefit from unemployment benefits or food stamps. They also recommended raising Medicare premiums for individuals with incomes over $750,000 a year.

House Speaker John Boehner said flatly that any tax-cut extension will be offset by cuts elsewhere in the budget to avoid raising federal deficits. Numerous Republican officials noted that Obama had said the same thing was true of the plan he unveiled in a nationally televised speech to Congress in September.

The events in Congress, coupled with Obama’s fresh appeal for renewal of the payroll tax cut while speaking Wednesday in Scranton, Pa., indicated that leaders in both parties want to seek a compromise less than a week after Congress’ high-profile supercommittee failed to find common ground on a related economic issue, a plan to reduce deficits.

Yet nearly a full year before the 2012 elections, it also appeared that lawmakers in both parties are eager to compete for the political high ground before any compromise can be struck on the payroll tax or an extension of unemployment benefits that Republicans also said they might approve.

In a visit to blue-collar northeastern Pennsylvania, Obama warned of a “massive blow to the economy” if Republicans oppose his call for a renewal of the payroll tax cut approved a year ago as a way to stimulate economic growth.

“Are you going to cut taxes for the middle class and those who are trying to get into the middle class, or are you going to protect massive tax breaks for millionaires and billionaires?” he said, referring to Republicans.

“Are you going to ask a few hundred thousand people who have done very, very well to do their fair share, or are you going to raise taxes for hundreds of millions of people across the country?”

Senate Democrats have set a vote for later in the week to pay for the tax cut renewal by imposing a permanent 3.25 percent surtax on individuals or couples earning more than $1 million a year, a political maneuver designed to cast Republicans as the protectors of the wealthy at a time when unemployment is at 9 percent nationally. The proposal has no chance of gaining the 60-vote Senate majority needed for approval.

The Senate Republican alternative, unveiled in late afternoon, envisions extending an existing pay freeze for government workers through 2015 – a provision that would apply to lawmakers. It also proposed gradually cutting the government work force by 10 percent, or 200,000 positions.

Additionally, Republicans recommended taxing away the value of unemployment benefits and denying food stamps to any household with an income of $1 million or more, as well as raising the Medicare premium paid by individuals who earn more than $750,000 a year.

Republicans said their proposal would raise about $221 billion over a decade, covering the cost of a one-year extension of the existing payroll tax cut and leaving $111.5 billion left over for deficit reduction.

“The Democrats can say they just want some people to pay a little bit more to cover this or that dubious proposal,” said McConnell, who also noted that there were misgivings inside his party over Obama’s proposed tax-cut extension.

“Think about that,” he said. “The Democrats’ response to the jobs crisis we’re in right now is to raise taxes on those who create jobs. This isn’t just counterproductive. It’s absurd.”

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