White House readies for payroll tax cut fight

As the Aug. 2 deadline fast approaches for the U.S. government, Whit Johnson reports on the ongoing debate between Republicans and Democrats on how to reduce the nation's deficit.

This time around, the debate between the White House and Congress is not over whether or not a part of President Obama's American Jobs Act should pass - it's over how to pay for it.

The White House is holding firm on a 3.25 percent surtax for millionaires to finance an extension of the payroll tax cut. Republicans are arguing the surtax hurts small businesses and job creators.

In an interview today with CBS News chief White House correspondent Norah O'Donnell, Gene Sperling, Director of the National Economic Council, framed the argument this way: "The issue right now is will the entire Republican Party vote no and block a significant tax cut for every small business and every worker that could mean up to 600 [thousand] to a million more jobs next year simply because they don't want to put a small tax increase on the 300,000 Americans who make over a million [dollars]."

Senate Minority Leader Mitch McConnell signaled today on the Senate floor that the answer to Sperling's framing may be yes -- if the surtax on millionaires is kept in place.

"We're not arguing against extending this payroll tax cut," he said. "We just think we shouldn't be punishing job creators to pay for it."

But when asked about the possibility of an alternate way to pay for the tax cut, Sperling wouldn't budge.

"I'm not going to go beyond where we are right now because we have a proposal that's going to be voted on, and I think it's going to be very, very difficult for Republicans to in fact vote no," he said.

Senate Democrats are expected to bring their version of the bill, with the surtax, to a vote on Thursday.