Senate Republicans Block Tax Cut Extensions

Senate Republicans derailed legislation Saturday to extend expiring tax cuts at all but the highest income levels in a political showdown that paradoxically clears a path for a compromise with the White House on steps to boost the economy.

"We need to get this resolved and I'm confident we can do it," President Barack Obama said shortly after the near party-line votes. The public must have "the peace of mind that their taxes will not go up" on Jan. 1, he added.

Obama has signaled that he will bow to Republican demands for extending tax cuts at all income levels, and his remarks capped a day that lurched between political conflict and talk of compromise on an issue that played a leading role in last month's elections.

Sen. Chuck Schumer, D-N.Y., eyeing the 2012 campaign, accused Republicans of siding with "millionaires and billionaires" with their rejection of proposals that would let tax cuts passed during George W. Bush's presidency lapse on seven-figure incomes.

Republicans noted that unemployment rose to 9.8% last month and said it made no sense to raise taxes on anyone in a weak economy. Sen. Jon Kyl, R-Ariz., jabbed that Democrats were undergoing a "political catharsis" in public after losing control of the House and surrendering several seats in the Senate in the Nov. 2 election.

Compromise Expected

But the rhetoric subsided quickly after the votes, and Senate leaders in both parties said they hoped political clashes would give way to compromise in the next several days.

Kentucky Sen. Mitch McConnell, the GOP leader, said he was relatively confident there would be a deal with the White House "not to raise taxes in the middle of a recession." He said talks were continuing on the length of an extension to be enacted for the cuts that were put in place in 2001 and 2003.

Senate Majority Leader Harry Reid, D-Nev., said he hoped for an agreement by the middle or end of next week on legislation that would combine an extension of tax cuts with a renewal of expiring jobless benefits for the long-term unemployed.

Officials have said that in addition to tax cuts and unemployment benefits, the White House wants to include renewal of several other tax provisions that are expiring. They include a break for lower- and middle- class wage earners, even if they don't make enough to pay the government, as well as for college students and for companies that hire the unemployed.

Key lawmakers and administration officials have been at work negotiating the terms of a possible deal for several days.

But many congressional Democrats privately have expressed anger at Obama for his willingness to surrender to Republican demands to let the tax cuts remain in place at upper incomes, and numerous officials said no compromise would be possible until they had engineered votes in both the House and Senate.

Any deal would mean a reversal for Obama, who said in the 2008 presidential race and this year that he wanted to let cuts expire above incomes of $200,000 for individuals and $250,000 for couples.

Majority Loses

In the Senate, a bill to enact Obama's original position was blocked on a vote of 53-36, seven votes short of the 60 needed to advance. Republicans were unanimous in their opposition, and were joined by Democratic Sens. Russell Feingold of Wisconsin, Joe Manchin of West Virginia, Ben Nelson of Nebraska, Jim Webb of Virginia and independent Joseph Lieberman of Connecticut.

The second measure would have let taxes rise on incomes over $1 million. It appeared crafted to appeal to senators from states with large high-income populations, as well as cast Republicans as protectors of the rich.

It was blocked on a vote of 53-37, also seven short of the 60 needed. A slightly different lineup of Democrats sided with Republicans, including Sens. Dick Durbin of Illinois, Tom Harkin of Iowa, Jay Rockefeller of West Virginia and Feingold. Lieberman also opposed it.

The White House opposed the second measure bill, and given the president's willingness to sign a bill to extend all the expiring tax cuts, there was never any doubt about the outcome of the day's proceedings in the Senate.

But Democrats said that even with elections nearly two years away, they intended to try and depict Republicans as defenders of the rich whose policies contribute to rising deficits.

"Do we want to extend those tax breaks for millionaires and billionaires at a time of huge deficits? I would argue vociferously we shouldn't, said Schumer.

Referring to the 2012 elections, he said about Republicans: "I'm going to be here for the next year, next two years, to remind my colleagues that they were willing to increase the deficit $300 billion to give tax breaks to people who have income over a million dollars."

Will This Strengthen or Weaken Economy?

Republicans sounded alternately bemused and offended.

"It is the most astounding theory I have ever seen. Raise taxes to create jobs," said Sen. John Thune, R-S.D.

Sen. Orrin Hatch, R-Utah, said Democrats perhaps viewed the votes as a gift to their political constituents. But, he added, "two years of wall to wall Democratic rule has only made the situation worse" in the economy.

The day's events capped a week that included a meeting at the White House at which Obama and top congressional Republicans sat down together for the first time since the elections.

Both the president and GOP lawmakers pledged afterward they would try to work together for the good of the economy, and agreed to set up a small negotiating group to discuss the tax issues.

The White House, Reid and Republicans have been negotiating quietly, and McConnell made a point of saying he had been in frequent touch with the administration in recent days.

In addition to tax cuts, Obama has made ratification of a new arms control treaty with Russia a priority of the postelection session of Congress, reducing his leverage with Republicans in the struggle over taxes.

Senior Senate Republicans have indicated they will not try to interfere with a debate on the issue as long as government spending and tax cut issues have been resolved to their satisfaction.

A two-thirds majority is required for ratification, meaning the White House will need the support of at least nine Republicans to prevail. Vice President Joseph Biden and other officials have been involved in talks with several GOP senators in hopes of lining up the votes needed.


Increase your money and finance knowledge from home

How to Buy a Car

How to get the best deal and buy a car with confidence.

View Course »

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

Add a Comment

*0 / 3000 Character Maximum

15 Comments

Filter by:
rklantz

This lame duck session simply should not be held. It is very rare that this happens. This Congress no longer represents the will of the people.

December 05 2010 at 7:31 PM Report abuse +1 rate up rate down Reply
food chef

bggdg you should actually read a history book rather than listen to fox news types, in the history of the first half USA. We had taxes( import and export taxes ) and national debt one being from the revolutionary war the other from the Louisiana Purchase along with others . I believe Ben Franklin even made a comment that he liked the natioal debt because you could inflate money supply and thus pay it off at cheaper than the money value you borrowed.

December 05 2010 at 5:49 PM Report abuse -2 rate up rate down Reply
1 reply to food chef's comment
bggdg

food chef, you might want to see if your local community college offers an adult education class in english as a second language. For those who don't require such a class, I will repeat my pevious questions: "During the first half of our countries history, when we followed our Consitution and had NO INCOME TAX, HOW OFTEN did we run a budget deficit? And HOW OFTEN have we run a budget deficit since the income tax was instituted"? Weakly attempting to answer questions you are incapable of comprehending has yeilded a predicatable result. See full article from DailyFinance: http://srph.it/fWvs9q

December 05 2010 at 8:28 PM Report abuse +1 rate up rate down Reply
grandmere1225

The republicans are not Americans, They only want the rich to do better. They need to get their own country on the south pole.

December 05 2010 at 12:54 PM Report abuse -3 rate up rate down Reply
thesanantonians@

I belive , that a tax cut made in 2003 and continued till now for the wealthy , is long enough , it is a tax cut , that means that your taxes will go back to what you were paying before the tax cut. Come on now , you rich made money all the while others were paying their taxes at a sacrifice to their pursuit of happiness , now when the country needs money , because of what the republicans and their admin. have done thru-out the years and cause the problem , cut your silver tongue out and for once speak the truth or zip it. You the republicans gave Obama a broken down house, now he has to fix what you damage and you blame him. I say for the president of the USA , stand your ground and we the voters will see who stays in the white house congress and senate . what happen to government of the people and for the people , let the tax cut expire for the rich in this country and give us down here a break , even if you make 250,000.00 you should pay taxes , with that kind of income , why shouldn't you pay , you have investments and savings and surely you can afford to pay taxes. but their are americans working hard and making barely 25-60 thousand , this people need the tax break , but they too should pay some taxes , we are all in this together and In the word of John F. Kennedy , don't ask what this country can do for you , but what can you do for this country. You republicans act on this words and fix what you have damage ,man up to you responsiblities.

December 05 2010 at 12:25 PM Report abuse +1 rate up rate down Reply
1 reply to thesanantonians@'s comment
bggdg

thesantonians, you seem to absurdly imagine that high income taxpayers have been paying no taxes. In eality, the top 1% of earners pays over 40% of all income taxes, which is more than the combined bottom 95% of earners. If you agree with Kennedy that Americans should not be asking what their country can do for them, might this give you some notion of how our budget mess could be fixed?

December 05 2010 at 4:55 PM Report abuse rate up rate down Reply
marine1942

One way to slash the high budget is ground Air Force One

December 05 2010 at 11:38 AM Report abuse +2 rate up rate down Reply
1 reply to marine1942's comment
otterdad48

one

December 05 2010 at 8:59 AM Report abuse -1 rate up rate down Reply
otterdad48

One can be for deficit reduction or on can be for cutting taxes. To claim both is hypocricy.

December 05 2010 at 8:59 AM Report abuse -3 rate up rate down Reply
1 reply to otterdad48's comment
bggdg

otter, for the first half of our countries history, when we followed our Consitution and had NO income tax, how often did we run a budget deficit? And how often have we run a budget deficit since the income tax was instituted? Maybe something else is at work here? Ya think?

December 05 2010 at 9:59 AM Report abuse +4 rate up rate down Reply
cybrwalker

It's been 8 years...feel any trickle?

December 05 2010 at 3:10 AM Report abuse +2 rate up rate down Reply
cybrwalker

How are these job-creating Bush tax cuts working for ya?

December 05 2010 at 3:09 AM Report abuse +2 rate up rate down Reply
marine1942

Your headline shows bias

December 04 2010 at 8:02 PM Report abuse +1 rate up rate down Reply