Showing a new conciliatory tone, Senate leaders opened congressional business Thursday by suggesting that a bipartisan compromise might come soon on a spending measure to keep the government running past Friday and a bill to extend a one-year cut in the payroll tax rate paid by 160 million workers. 
 
 Senate Majority Leader Harry M. Reid (D-Nev.), who has been holding up a $1 trillion spending measure that would fund much of the government through next September, said he believes both issues can be resolved “in the next few days.” 
 
 Minority Leader Mitch McConnell (R-Ky.) likewise said that he and Reid have been in talks about how to move forward and that he is “confident and optimistic” about an agreement. 
 
 The government would face a partial shutdown at midnight Friday unless Congress resolves its latest spending battle. 
 
 “We’ve done enough back and forth — the Republican leader and me staking out our positions, and our positions are fairly clear to the American people,” Reid said on the Senate floor. “What we’re going to try to do during the next few hours is work toward resolving some of the outstanding issues.” 
 
 Speaking Thursday at the White House, President Obama said Congress must solve the payroll tax issue and get a funding bill in place before adjourning for the holidays. 
 
 But he did not address whether a compromise is emerging or whether he has withdrawn objections to the pending spending measure. 
 
 “Congress cannot and should not go on vacation before they have made sure that working families aren’t seeing their taxes go up by $1,000 and those who are out there looking for work don’t see their unemployment insurance expire,” he said. “There’s no reason the government should shut down over this, and I expect all of us to do what’s necessary in order to do the people’s business and make sure it’s done before the end of the year.” 
 
 Overnight, House leaders advanced a spending bill that had been negotiated by Republicans and Democrats on the House Appropriations Committee. Democratic leaders have kept the measure from moving forward after the White House expressed lingering concerns with some of the bill’s provisions and said it wanted Congress to agree to extend the tax cut first. 
 
 By filing the bill, the House indicated it would push ahead with the measure even without Democratic support. 
 
 Reid said Thursday that such House action would be a mistake. But he called the remaining Democratic concerns with the spending measure “resolvable” and “small in number” and said Congress is getting closer to a deal. 
 
 The Senate leaders’ apparent optimism comes after negotiations over how to extend the tax holiday and avoid a government shutdown ground to a halt Wednesday. 
 
 With a Friday deadline fast approaching, the threat of a shutdown grew more urgent. Cabinet secretaries for the first time formally alerted affected federal workers to the possibility of a shutdown — indicating in an ­e-mail that they would determine which staffers are “essential” to maintain operations in the event of a funding block. 
 
 Senate Democratic leaders met with Obama on Wednesday at the White House to weigh whether to drop their demand that the $120 billion payroll tax cut be paid for with a new surtax on millionaires. Republicans have rejected the idea, but it was not clear Wednesday whether a concession from Democrats would be enough to produce a deal. 
 
 Many Republicans express deep skepticism that extending the payroll tax cut would spark economic growth, as the president and Democrats have argued. 
 
 On Wednesday, Senate Republicans also blocked Democratic efforts to vote on a payroll tax bill approved Tuesday by the GOP-led House. The bill would link the tax extension to a series of Republican initiatives that include speeding up the construction of an oil pipeline from Canada to the Gulf Coast. Obama opposes tying the spending measure to the Keystone XL pipeline. 
 
 Reid said he wanted the vote to prove that the House measure lacks support — a first step, he said, to forcing negotiations on a compromise. Under Senate rules, Democrats can demand a vote on the bill Saturday but need members’ unanimous consent to vote before then. 
 
 “The sooner we put this useless partisan charade behind us, the sooner we can negotiate a solution that protects middle-class workers,” Reid said. 
 
 But McConnell insisted that the Senate should first take up the spending measure, which would keep the government funded through September. 
 
 Republicans say bipartisan negotiators have reached a deal on the spending bill. But they say the White House and Reid will not allow a final vote on the measure, holding the bill hostage and threatening a shutdown to increase Democratic leverage on the payroll tax issue. 
 
 Before filing the government funding bill after midnight Thursday, House Republicans huddled for two hours late Wednesday to discuss whether to proceed with a vote, even without a Democratic sign-off. 
 
 That could prove tricky. Many conservatives object to the bill’s $1.043 trillion spending level, negotiated by Democrats and Republicans in the August debt deal, and it’s not clear whether the bill could pass without some Democratic support. 
 
 House Speaker John A. Boehner (R-Ohio) told reporters late Wednesday that no decisions had been made, but that the House had acted to extend the tax cut and now it was the Senate’s turn. 
 
 “I’m tired of hearing what the Senate can’t do,” he said. “I think it’s time for us to wait and see what the Senate can do.” 
 
 When the House passes a spending bill, lawmakers can go on their holiday break, leaving Senate Democrats with the unpleasant choice of accepting the House’s payroll tax bill or rejecting it and taking the blame for allowing the tax break to expire. 
 
 The tension highlighted the fact that neither side has come up with a way to pay for the tax cut that can get the 60 votes necessary for Senate approval. 
 
 Senate Democrats say that the House bill is unacceptable and that they will vote against it, and the White House has said Obama would veto it. 
 
 Their objections center on several GOP initiatives added to the bill to attract votes from conservatives, many of whom would not support the tax cut extension otherwise. They include cuts in unemployment benefits, new rules that could require the unemployed to take drug tests and enroll in GED programs to receive benefits and the delay of new regulations on boiler emissions. 
 
 The bill would also extend a pay freeze for federal workers and raise Medicare premiums for upper-income seniors. And the two sides are clashing over a provision that would force a decision on a construction permit for the Keystone XL within 60 days. The State Department, which is reviewing the pipeline issue, has said that if forced to make a decision so quickly, it would have to deny the permit. 
 
 Twice, the Senate has also blocked Democratic proposals for the millionaire surtax. 
 
 If government shuts down, some agencies and departments would continue working, thanks to a partial spending bill passed in November. The departments of Agriculture, Commerce, Housing and Urban Development, Justice, State and Transportation, as well as NASA and some other smaller agencies, would be spared. 
 
 But much of the government would be shuttered. National parks would close, for instance, and processing of some passports would cease. The showdown marks the fourth time this year that congressional disputes have dragged the government to the brink of a partial shutdown. 
 
 Behind the white-hot rhetoric of their leaders, many rank-and-file lawmakers predicted that there would be a last-minute compromise to extend the tax cut and prevent a shutdown. A number of them wearily said that the only casualty of the fight would be Congress’s already battered reputation. 
 
 “It’s all going to get passed eventually,” said Sen. Tom Coburn (R-Okla.). “But the political maneuvering is sickening.” 
 
 Staff writers Paul Kane, Ed O’Keefe, David Nakamura and Felicia Sonmez contributed to this report. ||||| The endgame at hand, both Democratic and Republican congressional leaders expressed optimism Thursday at prospects for swift compromise to extend Social Security tax cuts, keep long-term jobless benefits flowing and avoid a threatened partial government shutdown at midnight Friday. 
 
 President Barack Obama speaks in the Eisenhower Executive Office Building on the campus in Washington, Thursday, Dec. 15, 2011, where he announced action to provide minimum wage and overtime protections... (Associated Press) 
 
 Still another year-end bill, setting new rules for the handling of terror suspects in U.S. custody, won final congressional approval and headed to President Barack Obama's desk for his signature. 
 
 "Right now, Congress needs to make sure that 160 million working Americans don't see their taxes go up on Jan. 1," said Obama, referring to the tax cut extension at the core of the jobs program he outlined in a nationally televised speech three months ago. 
 
 House Speaker John Boehner of Ohio, the most powerful Republican in an era of divided government, agreed. "We can extend payroll tax relief for American workers, help create new jobs and keep the government running. And frankly, we can do it in a bipartisan way," he said. 
 
 The long-moribund job market, too, appeared to be on the mend. Government figures showed 366,000 applications for unemployment benefits were filed last week, the lowest number since the near-collapse of the financial system in 2008 and the brutal recession that followed. 
 
 In the Capitol, the previous day's bristling rhetoric and partisan jabs all but vanished.0 
 
 Republicans agreed to consider changes to a $1 trillion spending bill compromise that they and at least one Democrat said had been wrapped up days ago. The White House said it wanted adjustments. 
 
 There were separate negotiations on legislation to extend the Social Security payroll tax cut and unemployment benefits. Democrats abandoned their demand for a surtax on million-dollar incomes that they wanted to include in the measure, removing a provision that Republicans strongly opposed. 
 
 "We hope that we can come up with something that would get us out of here at a reasonable time in the next few days," said Senate Majority Leader Harry Reid of Nevada. 
 
 At a news conference, Boehner minimized the concession, noting that Democrats lacked the votes to impose the surtax a year ago when they commanded 60 votes in the Senate. Even so, he said, "there was some movement yesterday from the White House and Democrat leaders" toward a compromise. 
 
 Boehner also left open the possibility of a compromise on another key sticking point _ a House-passed provision that all but requires construction of the proposed Keystone XL oil pipeline from Canada to Texas. 
 
 Construction "will put 20,000 people to work immediately And there are about 115,000 other jobs directly related to it," he said. Yet he skipped an opportunity to say construction of the project was a non-negotiable condition as talks on the payroll tax cut bill proceed. 
 
 Obama has threatened to veto the House-passed bill, in part citing the requirement for the pipeline. The project has been studied for more than three years, but the president recently announced he would put off a decision until after the 2012 elections. 
 
 Without an extension of the payroll tax cut, 160 million Americans will have smaller take home pay beginning on Jan. 1, a fact that the president and leaders of both parties stressed as they looked for compromise. 
 
 Obama asked Congress to extend and also to expand the payroll tax cut that took effect last Jan. 1 and is due to expire at the end of the year. The House-passed bill renews the current reduction for one year, and it was unclear whether a final compromise would go any further. 
 
 The president also wants to leave in place a system that provides aid for up to 99 weeks for the long-term unemployed. The House-passed measure reduces the total by 20 weeks, a step that the administration says would cut off 3.3 million individuals and that Democrats are hoping to soften if not reverse. 
 
 Also part of the negotiations was an attempt to head off a threatened 27 percent cut in payments to doctors who treat Medicare patients, an item added in the House to appeal to conservatives unhappy at extending the payroll tax cuts. 
 
 Reid indicated that a number of expiring tax breaks were on the table, as well, a list that included a provision that benefits commuters who use mass transit. 
 
 In a bow to deficit-conscious conservatives in the House, Obama and leaders in both parties have agreed to offset the cost of the measure to avoid raising deficits. 
 
 The White House and Democrats wanted to use the surtax on million-dollar income to finance most of the bill. But with that off the table, they were required to look elsewhere in talks with Republicans. 
 
 The House-passed measure relied on a pay freeze and increased pension contributions for federal workers, as well as higher Medicare premiums for seniors with incomes over $80,000, beginning in 2017. The bill would also would raise a fee that is charged to banks whose mortgages are guaranteed by Fannie Mae and Freddie Mac, and cancel more than $40 billion from the year-old health care bill that is Obama's signature domestic achievement. 
 
 At about $1 trillion, the year-end spending measure would lock in cuts that Republicans extracted from Democrats in negotiations conducted months ago against the deadline of a previous government shutdown threat. 
 
 This time, the two sides reached an agreement days ago, according to Republicans and at least one Democrat, well ahead of the Friday midnight deadline. Somewhat belatedly, the White House and Reid insisted otherwise, and Republicans accused them of reneging on the deal to gain leverage in negotiations on the payroll tax bill. 
 
 In response to the Democrats, House Republicans threatened on Wednesday to repackage the measure and pass it. The leadership held the threat in abeyance while compromise negotiations took place. 
 
 The separate defense bill covered military personnel, weapons systems, the wars in Afghanistan and Iraq and more at a cost of $662 billion, $27 billion below Obama's request. The Senate approved it by a resounding 86-13. 
 
 The main controversy revolved around a provision to require military custody for foreign terrorist suspects linked to al-Qaida or its affiliates and involved in plotting or attacking the United States. Under a change made to gain Obama's backing, the legislation would permit the FBI to arrest and interrogate foreign terror suspects, as is now the case. 
 
 ___ 
 
 Associated Press writers Donna Cassata and Andrew Taylor contributed to this story. ||||| Harry Reid says he's still hoping for a longer-term deal on the payroll tax. Payroll, benefits talks continue 
 
 Congressional leaders finalized a deal on Thursday to fund the government through next fall and are now considering a short-term extension of a payroll tax holiday and jobless benefits that would affect millions of Americans next year. 
 
 After a marathon round of negotiations, Democrats and Republicans signed off on a $1 trillion spending bill to keep the government funded through next fall, and that plan is expected to be approved by the full House and Senate on Friday, hours before many federal agencies would have been forced to shutter their doors. 
 
 Story Continued Below 
 
 But sticking points remained over how to pay for a year-long extension of a payroll tax holiday, jobless benefits and to avert a scheduled pay decrease for physicians serving Medicare patients. So negotiators are now actively considering a $40-billion, two-month extension on those measures. 
 
 A two-month extension would “make sure people continue to get their … payroll tax holiday and also the unemployment benefits and also doctors would be able to continue to do their work on Medicare patients,” Senate Majority Leader Harry Reid (D-Nev.) told reporters as he left the Capitol Thursday night. Reid added that he still hoped for a longer-term deal on those matters. 
 
 But it would also reignite a battle over the issue just as President Barack Obama is campaigning for reelection. A senior administration official said short-term extension would meet Obama’s principle that taxes don’t go up on the middle class, but they were withholding a fuller analysis until they saw a bill. 
 
 On Thursday night, Reid also filed a procedural motion to cut off debate on the House-passed payroll bill, setting up a vote as late as Saturday morning. The bill could be used as the vehicle for a final year-end deal, sources say. 
 
 Negotiations on a year-long extension over the payroll tax plan — which has been demanded by Obama — are expected to continue Friday. 
 
 “Everything is still moving along,” said Sen. Chuck Schumer (D-N.Y.) after leaving a Thursday night meeting with other Democratic leaders. 
 
 By Thursday afternoon, expectations were growing that an agreement could be reached that would allow the House and Senate to vote on a government funding bill by Friday. Sources said an increase in funding for the enforcement of the Dodd-Frank financial services law and to change language tightening travel restrictions to Cuba helped generate Democratic support. 
 
 Staff for Senate leaders had been holed up in the backrooms of the Capitol, deliberating over weighty issues involving how the costs of the extensions should be paid for and how to resolve other sticking points, such as a provision calling for the construction of a major oil pipeline. Separate negotiations were ongoing between the White House and top Republicans over policy riders in the year-end spending bill. 
 
 After an acrimonious first half of the week, there were growing signs Thursday that a deal was within reach and that leaders were eager to put to an end a bitter year of legislation that has been marked by three near-government shutdowns and fears over a debt default. ||||| Democrats, GOP make final effort to pass tax bill, stave off government shutdown 
 
 By Erik Wasson - 
 
 The House and Senate have begun final negotiations on a $1 trillion omnibus. 
 
 House Appropriations Committee Chairman Hal Rogers (R-Ky.) said talks are under way and that “things are looking up.” 
 
 Rogers said he is hopeful that Senate appropriators will be allowed to sign the conference report soon. 
 
 "We're optimistic that the senators will sign the conference report and we'll get things concluded," Rogers said. 
 
 "Things are looking up and I am looking up," he added, putting his hands together as if in prayer. 
 
 The House unveiled the omnibus legislation Wednesday night, though Democrats hadn’t signed off on the agreement. However, Senate Majority Leader Harry Reid (D-Nev.) on Thursday signaled the sides were edging closer to a deal. 
 
 Unless Congress approves an omnibus or a short-term measure to fund the government before Saturday, most of the government will shut down this weekend. The departments of Agriculture, Commerce, Justice, Transportation, Housing and Urban Development would not be affected since their appropriations bills were already approved. 
 
 The omnibus has been a bargaining chip in a separate fight over extending the payroll tax cut extension. Both sides have been looking for leverage in that fight, as neither side wants to be blamed for a failure to extend the tax cut. 
 
 It remains unclear whether the House and Senate will be able to resolve their differences and complete work on both the payroll tax measure and the omnibus before the end of the year. Members in both chambers are hoping to leave Washington by Friday, but it remains possible lawmakers will work through the weekend and into next week to finish up the two measures. 
 
 Rep. Jim Moran of Virginia, a senior Democratic appropriator, played down the chances of the government partially shutting down at Friday’s end. 
 
 But he also called the whole showdown over the omnibus spending bill an “indictment of the legislative process.” 
 
 “I’m embarrassed that it happened, but I think the chances of a shutdown are zero,” said Moran, whose Northern Virginia district contains many federal workers. 
 
 Moran said it was his “hope and expectation” that lawmakers would sign off on the conference report for the omnibus package on Thursday, and that the legislation would receive a floor vote on Friday. 
 
 The Virginia Democrat also chided the Obama administration for pushing to link the government spending measure with the extension of the payroll tax cut, in an attempt to gain more leverage over congressional Republicans. 
 
 “Some folks have communicated to the White House that they should not be using federal employees as pawns in a larger issue, that if we have an an omnibus appropriations bill that can, and should, and will eventually be enacted, we should do it now and not hold it up,” Moran said. 
 
 Rogers did not specify which provisions of the omnibus bill would be reopened, but Republicans have said they are willing to negotiate over language limiting travel by Cuban-Americans to Cuba. 
 
 A senior Democratic appropriator, Rep. Jose Serrano (D-N.Y.), pointed to a dispute over travel restrictions to Cuba as the last sticking point, voicing amazement that the communist island still divided Congress. “Technically we’ve got one issue holding up the package, and it’s Cuba again, 52 years later,” Serrano told reporters. 
 
 He said House and Senate negotiators had agreed to eliminate a provision reinstating a longstanding travel ban loosened by President Obama, but that Boehner’s office intervened. “The Speaker has made it a priority,” Serrano said. 
 
 He said that the change could have immediate effects because the Treasury Department estimates that 300,000 Cuban Americans travel to Cuba over the holidays and those already in Cuba could be in violation of the law if it passes. 
 
 “Lets say the bill gets approved tomorrow and the president signs it Saturday morning: Saturday morning, folks who left and are in Cuba already are in violation of federal law. Nobody thought about this,” Serrano said. “The charter company that flew them to Cuba technically couldn’t go and pick them up, because they would be in violation of federal law.” 
 
 Serrano said that he wants assurances the president would waive the provision if a waiver was inserted into the rider. 
 
 “The most amazing thing is that Cuba is still a congressional issue 52 years later,” he said. 
 
 Prior to Thursday, Democrats had said there were just five issues remaining on the omnibus: the prohibition on Cuba travel, a prohibition on light bulbs standards, a prohibition on D.C-funded abortion, a provision allowing the military to treat coal as an alternative fuel and a desire by the White House to tack on increased funding for the Commodity Futures Trading Commission which had its funding cut in the minibus passed last month. 
 
 — This story was posted at 2:20 p.m. and was last updated at 3:52 p.m. 
 
 Russell Berman and Bernie Becker contributed to this story.
– The gist of the articles coming out of Washington this evening suggests that lawmakers will manage to strike a spending deal before tomorrow's midnight deadline to avoid a shutdown. Also looking up are prospects for deals to extend the payroll tax cuts and jobless benefits, say the Washington Post, AP, Politico, and the Hill. Much of the optimism stems from the fact that lawmakers are managing not to snarl at each other in public, unlike yesterday. Some examples: Harry Reid: "We've done enough back and forth. ... We hope that we can come up with something that would get us out of here at a reasonable time in the next few days." John Boehner: "We can extend payroll tax relief for American workers, help create new jobs and keep the government running. And frankly, we can do it in a bipartisan way." Mitch McConnell: Pronounced himself "confident and optimistic." House Appropriations Committee Chair Hal Rogers, R-Ky: "Things are looking up and I am looking up."