The White House and lawmakers were furiously negotiating. Treasury Department lawyers examined whether Geithner could freeze the withholding tables, according to people familiar with the matter.
The lawyers didn’t agree on the circumstances under which Geithner could act. Some said he could act only if there was near-certainty that Congress would prevent rates from rising. Others argued that he could defer changes to the tables if there was simply a high probability that negotiators would strike a deal in the new year to extend the tax cuts. Geithner’s top advisers concluded that he could probably postpone changes to the tables under those somewhat looser circumstances, but a deal between the parties in December 2010 averted the need to make a final decision.
Spokeswomen for the White House and the Treasury Department declined to comment on what the administration would do this time around.