At a minimum, Obama wants to see the current tax cut for employees extended for 2012. Senate Democrats are seeking to reduce the payroll levy to 3.1 percent for workers. They would also lower the employer rate to 3.1 percent on the first $5 million in payroll and eliminate the levy entirely for each company's first $50 million in wage growth.

The Democrats' $265 billion proposal would be offset by a permanent 3.25 percent surtax on annual income exceeding $1 million.

Under the Senate Republicans' proposal, federal agencies would be allowed to hire one worker for every three who leave, until the agency's workforce has been reduced by 10 percent.

Pay Freeze

The pay freeze would apply to all civilian employees of the executive branch, along with members of Congress and their staffs. The 10 percent workforce reduction doesn't appear to apply to congressional staff, based on the text of the bill.

"This is an attempt to single out and scapegoat federal employees who had nothing to do with the economic problems the country's facing while refusing to ask the very well-off in this country to share the responsibility," said Representative Chris Van Hollen, a Maryland Democrat whose district includes many federal employees.

House Republicans will come up with their own proposal on extending the payroll tax, said Representative Tom Price, a Georgia Republican.

"The payroll tax won't come by itself," Price said, predicting that it would be rolled into a package extending a range of provisions set to expire Dec. 31. Price said his support, and the support of other like-minded Republicans, would hinge on "what the whole package is at the end."

Democrats also want to continue expanded unemployment benefits that are due to expire at the end of this year. House Democratic Whip Steny Hoyer of Maryland said he believes Republicans haven't decided whether to insist on offsetting the cost of those benefits with spending cuts.

Miscellaneous tax breaks and a provision to prevent a scheduled reimbursement cut to doctors under Medicare also expire Dec. 31.