A top advisor to President Barack Obama said Tuesday the fragile US economy needed "more medicine," stepping up a campaign for the extension of payroll tax cuts by a fractious Congress.

Alan Krueger, chairman of Obama's Council on Economic Advisors, said that the cuts in the amount Americans must pay to finance retirement and medical insurance for the elderly had provided important support for the economy.

"This is a critical time for the economy, and I think it's a time where the economy can use more medicine to strengthen and sustain the recovery," he said.

Obama signed a two percentage point cut in payroll taxes last year, and Krueger said the move had bolstered the economy against outside shocks, including rising gas prices, European debt turmoil and the Japanese tsunami tragedy.

As part of his $447 billion jobs plan, Obama proposed further cutting the payroll tax for employees to 3.1 percent of earnings and to halve the employer contribution from 6.2 percent to 3.1 percent in a bid to spur hiring.

The administration says the move would give Americans earning $50,000 a year a $1,500 tax cut next year as compared to a $1,000 tax hike if Congress does not extend the benefit by its expiry date at the end of this year.

"I think the economic argument for these proposals is quite compelling," Krueger said.

"I think across the spectrum of economists you would find support for applying this type of medicine to the economy now."

An initial Senate vote on extending the payroll tax, likely the first step in a new spate of political grandstanding, is expected this week.

The issue, the latest bitter row between Obama's Democrats and Republicans over taxing the rich, is evolving into a pre-Christmas showdown on Capitol Hill along with White House demands for an extension of unemployment insurance (UI).

Some Republicans are opposed to extending the payroll tax cut because they argue it does not stimulate the economy as much as an income tax cut would.

Democrats counter that the payroll tax cut is felt most by low-income earners who tend to immediately spend any extra cash, maximizing the measure's stimulatory impact.

Congressional Democrats want to pay for the tax cut by levying a 3.25 percent surtax on people earning $1 million -- a proposal Republicans reject, arguing it would slow the economy and hurt small business owners.

But Republicans, who have enough votes to block Democratic measures in the Senate, plan to offer their own plan to offset the cost of the payroll tax cut with other spending reductions.

"In the end, it will have to be worked out in a joint negotiation between a Democratic Senate and a Republican House," said Senate Republican minority leader Mitch McConnell.

Obama is due to travel to Scranton, Pennsylvania -- a fabled stronghold of blue collar, white voters, with whom he has sometimes struggled to connect -- to push his proposal for a payroll tax cut extension on Wednesday.

The White House has so far refused to say whether Obama will veto a bill that extends the payroll tax cut, but does not pay for it with Democratic proposals for a tax on millionaires.