The emerging deal had appeal for some Senate Democrats. For starters, it would forestall Republicans’ backup plan -- a bill that would extend the lapsed breaks only through Dec. 31, 2014.

Wind Energy

Republicans take over the Senate in January, giving them more control over the agenda and greater ability to pick and choose which of dozens of breaks survive. Democrats are concerned over the fate of the production tax credit for wind energy, which may fall victim to Republican opposition with only a short-term deal.

Under the bipartisan framework, the wind credit would have gotten a multiyear phaseout before expiring Oct. 1, 2017, the Republican aide said.

Revamping Taxes

The veto threat shows that the White House has calculated that an extenders agreement now -- regardless of the merits -- would make it harder for the administration to negotiate a revamp of the tax code with Republicans when that party controls the Senate, said a Senate Democratic staff member, who requested anonymity to discuss the matter.

The deal also would make permanent specific provisions backed by Senate Democratic leaders.

Reid, a Nevada Democrat, wants to lock in the deductibility of state sales taxes, an important issue in his home state, which lacks an income tax. In that state 22 percent of tax filers take advantage of the break, the second-highest percentage in the U.S., according to the Pew Charitable Trusts.

The extension of the mass-transit break is a top priority for Schumer, who represents New York. He’s also been a long-time backer of a tuition tax credit. Like Obama’s priorities, that break is scheduled to lapse at the end of 2017.

The potential deal could also have included two bipartisan agreements alongside the tax breaks, the Republican aide said. Those are a deal to exempt some health-insurance policies used by U.S. workers overseas from certain Obamacare rules and an agreement backed by dredgers and grain shippers to increase inland waterways fees.

Congress Returns

The veto threat automatically alters lawmakers’ calculations on the deal. Congress returns to Washington Dec. 1 and lawmakers plan to adjourn by Dec. 11.

That gives them little time to reach agreement and overcome days of potential procedural obstacles in Congress. The Internal Revenue Service is warning that the longer Congress takes to finish a plan, the longer tax refunds may be delayed in January.

By issuing the veto threat now instead of in December, Obama can buy time for Congress to create a new proposal that would be more acceptable to him or call his bluff and try to pass it over his objections.

Overriding a veto would require two-thirds of the lawmakers in the House and Senate, a high barrier for a deal that is already drawing opposition from Democrats. Early opponents include Representatives Chris Van Hollen of Maryland and Sander Levin of Michigan and Senators Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts.

‘Massive Handout’

“Millions of people are still struggling to recover from the financial crisis, but this deal would give a massive handout to big corporations and expect working families to pick up the tab,” Warren said in a statement. “Congress should be helping these families, not rewarding corporate lobbyists and their wealthy clients.”

Corporations, led by groups such as the Business Roundtable and the National Association of Manufacturers, have been lobbying for the tax-break extensions.

“Failure to extend these provisions is a tax increase,” more than 500 business groups wrote to lawmakers Nov. 18. “It will inject instability and uncertainty into the economy and weaken confidence in the employment marketplace.”

Companies with breaks at stake in the talks include General Electric Co., Citigroup Inc. and Wal-Mart Stores Inc.

The biggest beneficiaries of the breaks would include corporations that conduct research, residents of states such as Washington and Texas that lack an income tax, and wind-energy producers concerned that their tax benefit would end all at once instead of being phased out. Tax breaks for low-income families that lapse at the end of 2017 wouldn’t be extended.

Senate Democrats

Obama’s rejection of talks involving Senate Democrats shows tension in the relationship between the president and some parts of his party in Congress, particularly Reid.

“I have no idea what is going on here,” said Jim Manley, a former aide to Reid. “The idea that the White House would be willing to threaten a veto like this before a deal is even announced is very unusual.”

Under the emerging deal, the tax break for corporate research would be expanded and made permanent, benefiting companies such as Intel Corp. and Johnson & Johnson. A benefit that lets small businesses write off investments more quickly also would be locked in.