Senate blocks extension of Bush-era tax cuts

By Shailagh Murray
Sunday, December 5, 2010

The Senate rejected on Saturday two Democratic proposals to extend the Bush-era tax cuts for all but the highest income levels, a symbolic defeat that forces the Democratic majority to compromise with Republicans or risk a tax increase for virtually every American at year's end.

The nearly party-line votes - one on a plan to preserve the breaks for only the first $250,000 of family income, the other for the first $1 million - represented a final stand for Democrats as the session winds down and political posturing gives way to pragmatic deal making. Efforts quickly shifted to negotiations that would extend all the cuts, an outcome that seemed increasingly likely.

Congress has much to do before its self-imposed deadline of adjourning by Dec. 17, including passing a funding resolution to keep the federal government operating into next year, renewing jobless benefits for millions of Americans and ratifying an arms treaty with Russia, a top priority for President Obama.

As Senate Democrats staged their tax votes Saturday, Republicans engaged in behind-the-scenes talks with the Obama administration on a compromise plan to extend all the breaks for two to three years. Obama had favored the Democratic approach of preserving only the breaks on the first $250,000 of family income and $200,000 of individual income, but he pledged after the votes that he and other negotiators would "roll up our sleeves" starting this weekend to cut a deal.

"With so much at stake, today's votes cannot be the end of the discussion," Obama said. "We need to redouble out efforts to resolve this impasse."

According to the White House, the president told Democratic congressional leaders that he was open to compromise but would oppose even a temporary extension of the tax cuts if it did not include an extension of unemployment benefits and extensions of other tax cuts that benefit middle-class families.

A push on priorities

The showdown revealed a potentially significant new fault line that appears to be developing on Capitol Hill as lawmakers and the White House adjust to a political landscape radically altered by the midterm elections.

Democrats are using the lame-duck session to push through as many liberal priorities as time permits. Senate Majority Leader Harry M. Reid (Nev.) announced Saturday that he would try to hold votes on new collective-bargaining rules for firefighters, an immigration law that would affect people who came to the United States illegally as children and a repeal of the ban on gays serving openly in the military.

None of those initiatives is expected to advance, but Democratic lawmakers have promised their supporters one final effort before their Senate majority is reduced to 53 votes from 58. To overcome procedural objections, 60 votes are needed.

Republican leaders, meanwhile, appear to be testing tactics as they pivot from the opposition role that defined the party's approach during Obama's first two years in office to a posture of engagement that has changed GOP-White House relations.

"I think it's a healthy sign now that there's probably been more conversations between the White House and Senate and House Republicans in the last two weeks, than in the last two years," said Senate Minority Leader Mitch McConnell (Ky.). "There's a growing awareness on both sides that the powers and the process are shifting, and we have to communicate with each other and deal with each other more often."

A deal on the tax cuts, combined with an extension of unemployment benefits and the Senate ratification of the New START treaty, would represent one of the most significant bipartisan agreements of Obama's presidency.

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