After meeting, hope for a deal on tax cuts

By Shailagh Murray and Perry Bacon Jr.
Washington Post Staff Writers
Wednesday, December 1, 2010

President Obama and congressional Republicans expressed determination Tuesday to reach an agreement on the tax cuts due to expire at year's end, raising the possibility of a compromise that could avert a tax increase for virtually every American worker.

The comments came after a much-anticipated meeting at the White House between Obama and GOP leaders, their first face-to-face encounter since Democrats suffered heavy losses on Election Day. No formal agreement was made, but the meeting marked a sharp departure from the practice of the past two years, when Obama dealt almost exclusively with Democrats - in part because Republicans were content to try to block his every move.

On Tuesday, according to people in the room, both sides engaged in the kind of cross-party dealmaking that seems to have faded away in today's Washington. The participants emerged smiling and with a loose framework - though they did not outline it publicly - that could result in the temporary extension of all the tax cuts, as well as the ratification of a nuclear arms treaty with Russia, the continuation of unemployment benefits and funding for government operations into next year.

Lawmakers who just days ago doubted that Congress's lame-duck session this month would produce much legislation of substance suddenly seemed hopeful.

"We've got a path forward" on the tax-cut issue, said Richard J. Durbin (Ill.), the No. 2 Democrat in the Senate, who attended the meeting. Of the New START treaty, which Republicans have been intent on blocking, he said: "We have not ruled it out. We're trying to figure out how to work it into the schedule, after we deal with taxes and spending."

The meeting was only the beginning of a process that could last several weeks and, if it is to succeed, will require rank-and-file lawmakers from both parties to accept major concessions on issues that until recent days seemed intractable. Democrats in particular are deeply divided on the tax cuts and may have to yield on some of their top priorities, including a bill that would create a path to citizenship for illegal immigrants who were brought here as children and the repeal of "don't ask, don't tell" - efforts that almost certainly will face a harder slog once the GOP takes control of the House and expands its numbers in the Senate.

A tax-cut task force

The most tangible publicly announced accomplishment in the two-hour closed-door session was an agreement to form a bipartisan group to seek a solution to the impasse over taxes. The group - Treasury Secretary Timothy F. Geithner, White House budget director Jacob Lew and two lawmakers from each party - held its first meeting Tuesday afternoon.

"We should work to make sure that taxes will not go up by thousands of dollars on hard-working middle-class Americans come January 1st, which would be disastrous for these families, but also could be crippling for the economy," Obama told reporters. "There was broad agreement that we need to work to get that resolved before the end of the year."

Republicans have insisted that the tax cuts, enacted under President George W. Bush, be extended for all income groups. Most congressional Democrats are opposed to extending cuts for household income above $250,000, though Obama and his aides have recently signaled a willingness to compromise on this point.

What could break the logjam is a deal to extend all the cuts temporarily, along with horse-trading on other issues important to both parties, according to people present at the White House meeting.

Senior Republicans, eager to avoid a government shutdown, want Democrats to agree to fund the government well into next year. Democrats, particularly in the House, want to see jobless benefits extended, and Obama wants a Senate vote on the New START pact.

One key player in the treaty negotiations is Sen. John McCain (R-Ariz.), who has been the target of heavy White House lobbying in recent days, including from Vice President Biden, sources close to the discussions said.

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