After making the case in last night’s press conference about  the urgent need for health insurance reform, President Obama said today that Congress won’t have to finish its work before recess.

Senate Majority Leader Harry Reid, D-Nev., admitted earlier today that the Senate wouldn’t be able to deliver a bill before the August recess, and in response Obama sounded resigned. “That’s OK, I just want people to keep on working,” he said. “Just keep on working. I want it done by the end of the year. I want it done by the fall.”

As the Senate and the House try to keep on trucking in their efforts to find a way to pay for health reform while alienating as few voters and donors as possible, they also appear to have given ground on a key tax proposal.

In the bill introduced by House Democrats last week, the surtax would have kicked in for families earning at least $350,000 in adjusted gross income. After hearing complaints about the tax hike, the Democrats now seem to have raised that threshold to those earning at least $1 million, of whom there are far fewer these days. Obama appeared amenable to that proposal, while emphasizing that his preferred route was to limit deductions by high-income taxpayers and have them pay the standard deduction instead.

Be that as it may, he and Congress will have until at least September now to thrash out the details. That deadline could slip even further. During a webcast today by Ernst & Young, Anne Phelps of the firm’s Washington Council said, “The general feeling is we may be here ’til December debating health care reform.”

Indeed, the deadline does seem to have slipped more and more lately, and the final bill may end up as a stocking stuffer near the White House Christmas tree. But as Obama noted last night, “If you don’t set deadlines in this town, things don’t happen.”

The default position, as he noted, may be inertia. It’s also avoiding making unpopular decisions like raising taxes.