* Taxes, postal reform, farm policy among hung-up bills
* Election-year politics deepen divisions
By Richard Cowan and Thomas Ferraro
WASHINGTON, July 30 (Reuters) - The U.S. Congress is limping toward what some see as a not-so-deserved five-week vacation starting on Friday, dimming hopes it will complete work on many or any of the major issues confronting it, from taxes, agriculture, and trade with Russia to cyber security and postal service reform.
Campaigning, not legislating, appears to weigh most heavily on the minds of congressional Republicans and Democrats in the run-up to the Nov. 6 elections to pick the next president, 435 members of the House of Representatives and one-third of the 100-member Senate.
On most issues, the parties are not pretending they are trying to work out their differences. Rather, they are sponsoring measures designed to emphasize them on the campaign trail.
This choice of confrontation over cooperation continues a trend that heightened at the start of 2011, when Tea Party-backed Republicans joined Congress with a top priority of shrinking government spending and keeping taxes low.
Over the weekend, following Senate passage of a Democratic tax bill, both parties organized "message" events in key states. They took out ads denouncing the other side for recalcitrance and made their differences the subject of their weekend radio addresses, employing nearly identical language.
"The president and his Washington allies need to stop holding America's economy hostage in order to raise taxes on those trying to lead our economic recovery," Republican Senator Orrin Hatch said for his side.
"Instead of doing what's right for middle-class families and small business owners, Republicans in Congress are holding these tax cuts hostage until we extend tax cuts for the wealthiest Americans," President Barack Obama said.
When lawmakers return to Washington in early September, there will be little time left for Congress to work out compromises on major bills - especially since big blocks of September and October will again likely be devoted to campaigning back home.
With few exceptions, about the most Congress may get done this year is a series of stop-gap measures.
The list of potential legislative casualties is growing.
A massive farm bill is hung up in the House, where Republicans might not have the votes to renew costly agriculture programs for another five years.
With current farm programs set to expire on Sept. 30, Congress could be on the verge of doing what it does best - leaving the big decisions for another day - and passing a temporary, one-year farm bill extension.
Democrats object to Republican calls for cutting food stamps for the poor by about $16 billion, especially during a weak economy beset by an 8.2 percent unemployment rate. Conservative Republicans object to the size of the bill and what they call the "entitlements" it contains for farming companies.
The Senate will focus this week on a cyber security measure aimed at stopping computer hacking from countries like China and Russia that has U.S. businesses and individuals worried.
Cyber security was originally billed as an area of common ground, one of the few where the parties could come together. But that has been delayed too.
A bill passed by the Republican-led House in April contains provisions that Democrats do not like, mainly having to do with computer privacy concerns.
By week's end, the Democratic-led Senate could pass a version of legislation that again leaves the two chambers far apart.
Another bill some thought could ease through Congress, lifting what has become a largely symbolic Cold War-era restriction on trade with Russia, has encountered opposition from U.S. labor unions, which are still fuming over normalization of trade with China.
"America's working families cannot afford another mistake like the grant" of normal trade relations with China, the AFL-CIO labor federation said in a letter to lawmakers last week.
The measure, establishing "permanent normal trade relations" with Russia, was approved by a key congressional committee last week on a bipartisan vote. The White House has endorsed it as well.
But Speaker of the House John Boehner said he did not plan on bringing the bill up this week because the House was busy with other legislation and Obama had not done enough to make the case for Congress to approve it.
Other measures languishing in the deadlocked Congress are moves to reform the U.S. Postal Service, which is losing billions of dollars a year, and renewal of an expired law that aims to protect women from domestic violence.
So it goes for one of the most unpopular Congresses in history, which, according to recent opinion polls, has an approval rating of just 16 percent.
"I tell my constituents that I am as frustrated as they are," said first-term Republican Representative Michael Grimm. "I came here to get things done."
"There's a lot of sound and fury around here that produces nothing," said veteran Senator Joe Lieberman, a former Democrat turned independent. "There's plenty of blame for both sides."
There will be more sound and fury in the House this week, as the two parties square off again on taxes.
The debate could culminate on Thursday when Republicans are likely to win passage of a one-year extension of all the income tax cuts enacted a decade ago by then-President George W. Bush.
Democrats are rallying behind a different approach spearheaded by Obama: a temporary extension of the tax cuts on household-adjusted income up to $250,000, leaving the wealthiest 3 percent with a tax hike come Jan. 1. An identical bill was approved in the Senate last week.
Both parties know the tax votes are being taken just to provide political talking points for their respective re-election efforts and both acknowledge that comprehensive fixes to the clunky, outdated U.S. tax code are at least a year away.
Representative Sandy Levin, the senior Democrat on the tax-writing House Ways and Means Committee, was asked by a reporter on Monday whether there was any chance of an agreement on taxes before the elections.
"We have to somehow return to the atmosphere of where there was some give and take. I wish I could be more optimistic," he responded.
Taxes are a hot-button issue, but so is the other side of the fiscal ledger - spending.
Once again, Congress has not been able to come together on how to fund basic government activities for the fiscal year starting on Oct. 1.
With little chance of any full-fledged spending bills being approved by a Sept. 30 deadline, lawmakers are heading toward a temporary measure, one that might avoid the chance of any embarrassing agency shutdowns shortly before the elections. But the tactic would leave agencies with no clear marching orders for next year.
Both parties are sounding open to a possible six-month stop-gap spending bill, but it is unclear how quickly they will find common ground on the tricky question of the funding level for that period of time.
While Congress has failed on a number of fronts, it did pass some major legislation, including a massive transportation bill expected to save or create a couple million jobs.
Even that bill was hung up for months in the House, frustrating states that were eager to get a jump on the summer construction season.
Additional reporting by Kim Dixon, David Lawder, Jasmin Melvin, Charles Abbott and Doug Palmer; Editing by Fred Barbash and Peter Cooney