Following Saturday’s Senate theatrics involving Bush-era tax cuts, it’s looking increasingly like a deal will be hammered out before Christmas
On Sunday’s TV talk shows, leaders of both parties indicated a compromise is in the works – likely involving an extension of tax breaks for all income levels, plus an extension of unemployment benefits.
As usual, the devil will be in the details. How long will the extensions last? Will there be budgetary offsets to cover the costs?
“I think that most folks believe that the recipe would include at least an extension of unemployment benefits for those who are unemployed and an extension of all of the tax rates for all Americans for some period of time,” Senate Republican Whip Jon Kyl, said on CBS’ “Face the Nation.”
Senate Democratic Whip Dick Durbin of Illinois, also on “Face the Nation,” agreed that the Senate was “moving in that direction.”
In essence, neither party wants to be seen as Scrooge-like as the holidays approach. Deadlines are looming for both the tax cuts and jobless benefits. Some two million jobless workers are scheduled to see their benefits end this month, and the Bush-era tax cuts end January 1.
Or as Durbin put it, “The notion that we would give tax cuts to those making over $1 million a year, which is the Republican position, and then turn our backs on two million Americans who will lose unemployment benefits before Christmas, is unconscionable.”
Until Saturday, the position of Senate Democrats was that the tax breaks should be extended permanently for poor and middle-class Americans – but not for the wealthy. Republicans were easily able to bat away that notion on two votes (one regarding a $250,000 income level, and a second raising that to $1 million).
GOP lawmakers also have threatened to stymie any legislative activity until the tax issue is settled.
That leaves Democrats needing to compromise.
Speaking on CNN’s State of the Union, Sen. Ron Wyden (D) of Oregon, said, “I would be willing to go along with a one year extension so we can protect the middle class, not do anything to discourage economic growth and give us the time to fix this job killing, insanely complicated mess of a tax system.”
Meanwhile, Treasury Secretary Timothy Geithner and White House budget director Jacob Lew have been negotiating with senior House and Senate members of both parties.
Quoting a White House official, the Wall Street Journal reports:
“President Obama told Congressional leaders he would seek GOP concessions: a year-long extension of unemployment insurance and tax cuts for middle-income and working poor Americans that were in the stimulus law but also expire at the end of this year. Those include the Making Work Pay tax cut of $400 for middle-income individuals and $800 for couples, a tuition tax credit, an expanded earned income and child credit for the working poor, and a payroll tax credit for new hires.”
Those are the kind of details that could prove devilishly difficult. Still, the pressure is on for both sides to come up with an agreement.