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The federal government has begun preparing again for a government shutdown as stalled negotiations over a payroll tax holiday prevent a spending bill from advancing in Congress. 

This afternoon, federal agencies began sending e-mails to employees instructing them to prepare for a shutdown. Office of Management and Budget spokesman Kenneth Baer said there's still time for Congress to pass a spending measure but added, “We do need to be prepared for any contingency,” reports The Washington Post. The irony is that the $1 trillion spending bill, which is needed to keep government funded through Friday, is one of the few pieces of legislation with broad bipartisan support in Congress.

However, President Obama and Senate Majority Leader Harry Reid decided to hold off passage of the bill until Democrats and Republicans agree on a payroll tax holiday for 160 million Americans. The Republican-controlled House passed a payroll tax bill last night but loaded it with a number of provisions, such as loosening environmental regulations and fast-tracking a controversial oil pipeline, that Reid called dead-on-arrival and President Obama vowed to veto. The reason Reid wants to hold back the spending bill is because he's afraid Republicans will skip town following its passage, leaving Democrats and the President with a "take-it-or-leave-it" payroll tax bill they don't like. “If you’ve been on Capitol Hill for close of sessions, you will have witnessed the phenomenon where the House of Representatives passes a spending bill, throws it at the Senate chamber and heads for the airport,” Durbin told reporters Tuesday. “We can’t let that happen this year.” (Christmas recess begins Friday.)

So where do we go from here? The Hill's Daniel Strauss reports that top Senate Democrats, including Reid, Majority Whip Dick Durbin, Chuck Schumer and Patty Murray, are meeting with President Obama to strategize on a way forward this afternoon. The only hint at proposed plan comes from a congressional aide who tells the newspaper "the meeting will likely include a broader discussion of passing Democratic legislation before the end of the year." That's not a lot to go on, but The Huffington Post's Sam Stein tweets minutes ago that it was a discussion to drop the millionaires surtax, the Democrats' plan for paying for the payroll tax break. "confirmed, WH + Sen Dems discussed today dropping millionaires surtax from payroll tax extension. Q remains: how to pay for." 

Another increasingly likely strategy they may be discussing is a short-term spending bill to keep the government funded through the next week, giving legislators more time to negotiate the payroll tax. "A short-term funding bill seems much more likely, given that both sides stand to be blamed by the public if the government shuts down," reported The Hill's Erik Wasson yesterday. A short-term fix was originally proposed by Democrats but, according to Fox News reporter Chad Pergram, some Republicans are considering that option more palatable. "House GOPers talking about endgame options and payroll," he tweets. "Discussing if they should stay through wknd or maybe doing a CR to avoid shutdown." 

Still, it's anyone's guess which side will budge first as the clock ticks down.

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