* Obama to Congress: "Don't be a Grinch"
* President speaks in key voting state of New Hampshire
* Republicans less inclined to compromise
* Americans' opinion of Obama drops after panel failure
By Alister Bull
MANCHESTER, N.H., Nov 22 President Barack Obama
challenged the U.S. Congress on Tuesday to vote next week to
save an expiring payroll tax cut, a day after a high-profile
effort to tackle huge U.S. deficits collapsed in acrimony.
A new Reuters/Ipsos poll showing that Americans blamed
Obama in part for the "super committee" failure underscored the
challenges he faces to persuade voters he is the still the best
steward of the economy.
Obama, who is seeking re-election in 2012, was in campaign
mode when he traveled to New Hampshire -- a key voting state
where his Republican challengers will hold one of the first
primary votes of the 2012 election in January.
He caricatured Republicans as the "Grinch," a mean-spirited
character in a popular children's book about Christmas, for
failing to back his $447 billion jobs package and an extension
of payroll tax cuts due to expire at the end of the year.
Investors are already fretting about the fate of the tax
cuts, worried that Congress' failure to extend them could put a
damper on fragile economic growth.
Obama flew to New Hampshire after members of a bipartisan
congressional super committee announced that months of talks
failed to produce a deal to cut $1.2 trillion from U.S.
An online Reuters/Ipsos poll showed Americans blamed a
combination of Obama, Republican and Democratic lawmakers the
most for the panel's failure. More than one-third of those
surveyed said it lowered their opinion of Obama.
The president ramped up pressure on Republicans to back the
tax cut extension.
"In the spirit of Thanksgiving, we are going to give them
another chance," Obama said, referring to lawmakers in Congress
and this week's U.S. Thanksgiving holiday.
"Next week they are going to get to take a simple
vote. If they vote no again, the typical family's taxes will go
up $1,000 next year," Obama said in a campaign-style speech to
a cheering crowd packed into a high school gymnasium.
He got a roar from the crowd when he urged them to tell
lawmakers, "Don't be a Grinch."
Lawmakers initially hoped to include the tax break for
workers and other expiring economy-boosting measures in any
deal that would have emerged from the 12-member super
A senior Democratic congressional aide said plans were
being made to debate the payroll tax cut measure in the Senate
in early December and possibly as soon as next week.
NEW HAMPSHIRE ON PURPOSE
The White House specifically chose New Hampshire for
Obama's latest rebuke of Republicans, a state that has mostly
seen Republican presidential hopefuls visiting as they try to
woo voters before the January primary.
Republicans have not ruled out extending the tax cut and
jobless benefits, but they are likely to insist on additional
spending cuts to offset their $168 billion cost. That could
dampen the stimulative effect of the tax cuts.
While the details of the legislative effort are still being
worked on, Democrats could attempt to pay for the payroll tax
cut extension by raising taxes on the wealthy. Republicans have
blocked that idea in the past and likely would do so again.
In that event, the tax cut extension could come up again in
an end-of-year, catch-all bill to fund many government programs
through next September, the end of the current fiscal year.
"I think it will happen but not without a lot of drama. But
I don't think that will have any effect on markets. If it
doesn't happen, though, that could spook people and trigger a
rally in bonds," said James Sarni, a money manager at Payden &
Rygel in Los Angeles.
"It would just feed the fire by confirming that we are in
real trouble economically."
Even though global stock markets dropped on Monday amid
reports the super committee had collapsed without a deal, most
markets have moved on to more near-term worries like the debt
crisis in Europe. U.S. stocks were flat on Tuesday.
Analysts warn that economic growth could slow by up to 1.5
percentage points in 2012 if the 2 percent payroll tax cut and
enhanced jobless benefits are allowed to lapse.
"If Congress doesn't want to extend some of these benefits,
then it's going to ensure that the economy faces more hurdles,"
said Joel Naroff chief economist at Naroff Economic Advisors.
"Add that to the uncertainty in Europe and you have a very
disturbing outlook for the first half of next year."
Investors are also worried Congress might try to undo $1.2
trillion in automatic spending cuts over 10 years that will
begin in 2013 as a result of the super committee washout.
Republicans are already scrambling to shield the military
from $600 billion in cuts.
One Republican defense hawk, House of Representatives Armed
Services Committee Chairman Buck McKeon, announced his
intention to undo the military cuts even before the deficit
committee had admitted defeat on Monday.
Obama has vowed to veto such a move. His own defense
secretary is lobbying hard to preserve the Pentagon's budget.
Credit-rating agencies, already dismayed by Washington's
inability to tackle the country's fiscal woes, could downgrade
U.S. debt if the cuts are rolled back.