"It's going to come down to what type of spending cuts" Obama is "going to be willing to accept" because "I don't think you are going to find any Republican appetite to increase taxes," Cole said.

The Senate Republican proposal, introduced yesterday by Dean Heller of Nevada, would generate $222 billion in savings over the next decade by freezing federal pay through 2015 and reducing the civilian workforce by 10 percent. The bill would reduce federal budget deficits by about $111 billion.

Medicare Premiums

The plan would also make the highest earners pay the full cost of their Medicare premiums and prevent them from getting unemployment compensation and food stamps.

"This bill will provide some relief to struggling workers who continue to need it but without raising taxes on job creators, which is what the Democrats' proposal would do," McConnell said in a statement.

Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid, a Nevada Democrat, said the Republican offset wouldn't win Senate passage.

"The Republican proposal cannot pass the Senate as it stands, but now that Republicans have reversed their position on this middle-class tax cut, we look forward to working with them to negotiate a consensus solution," Jentleson said in a statement.

The Social Security portion of payroll taxes, which will be levied on the first $110,100 of income in 2012, is split between employees and employers. Each side typically pays 6.2 percent of wages.

Social Security Tax

For 2011, the Social Security payroll tax for employees was lowered to 4.2 percent. A worker earning $50,000 a year who is paid biweekly has been saving $38.46 in each paycheck.