Republicans hint at compromise on tax cuts and unemployment benefits

Senate Republicans have blocked legislation allowing taxes to rise on upper income taxpayers on Jan 1. The vote Saturday was 53-36, seven short of the 60 needed to advance the measure. (Dec. 4)
By David Brown and Lori Montgomery
Washington Post Staff Writers
Sunday, December 5, 2010; 7:51 PM

The Senate Republican leadership telegraphed on the Sunday morning talk shows that a compromise to extend unemployment compensation and the George W. Bush-era tax cuts is in the offing.

Senate Minority Leader Mitch McConnell (R-Ky.) and Sen. Jon Kyl (Ariz.), the Republican whip, told different interviewers that they expect Congress to vote for the tax cuts, which have been in effect for a decade, to continue unaltered for at least several years in exchange for an agreement to extend jobless benefits that are about to expire for millions of workers.

"Obviously, the president won't sign a permanent extension of the current tax rates. So we're going to have some kind of extension. I'd like one as long as possible," McConnell told host David Gregory on NBC's "Meet the Press." Moments later, he added, "I think we will extend unemployment compensation. . . . We're working on that package. . . . I think we're going to get there."

On CBS's "Face the Nation," Kyl told host Bob Schieffer: "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 the tax rates for all Americans for some period of time."

On the same program, Sen. Richard J. Durbin (Ill.), the Democratic whip, reluctantly concurred.

"I can tell you that without unemployment benefits being extended, personally, this is a non-starter. The notion that we would give tax cuts to those making over $1 million a year . . . is unconscionable." But, he added, "We're moving in that direction."

On Saturday, the Senate rejected two Democratic proposals for extending the Bush-era tax cuts, which the Republicans prefer to call "tax rates," because they have been in effect for so long. One would have extended them for the first $250,000 of family income. The second would have extended them for the first $1 million. The fact that a handful of Democratic senators voted along with every Republican gave McConnell a swaggering confidence that the tax cuts will live on intact.

"Imagine how much worse it would have been [in recent years] if we'd had the higher tax rate," he told Gregory. "Look, this argument's over, David. You and I can continue to engage in it, but it's over. The Senate voted yesterday. Every Republican and five Democrats said, 'We're not raising taxes on anybody in the middle of a recession.' "

On another contentious matter, ratification of the New START treaty on nuclear weapons with Russia, McConnell was neutral on whether the lame-duck Congress will consider it, while Kyl thinks it won't.

McConnell said he has "no idea" whether Senate Majority Leader Harry M. Reid (D-Nev.) will bring it up, nor would he say whether he would vote for it. Kyl, who has opposed voting until the Obama administration commits to modernizing the country's nuclear arsenal, said: "No, the answer is there is not time to do it in the lame duck, when you consider all of the other things that the Democratic leader wants to do."

The Labor Department estimates that 1.6 million people could stop receiving unemployment insurance checks by Christmas if the benefits aren't extended. About 6 million people could lose them by spring.

Normally, jobless benefits run out after 26 weeks. They currently are running to 99 weeks for some because of several congressional extensions.

Any deal cut between the White House and the GOP would have to be ratified by Democrats in Congress who are growing increasingly anxious about the prospect of voting to extend tax cuts for the rich along with breaks for the middle class. Many in the House are particularly agitated by the ongoing negotiations and say they are not inclined to rubber-stamp a deal that does not win significant Republican concessions to extend unemployment insurance as well as a host of tax cuts that were created in the 2009 stimulus package and are set to expire.

On Saturday evening, House Democratic leaders gathered at Vice President Biden's home to vent their frustrations to him and to White House Chief of Staff Pete Rouse, according to senior Democratic aides. The two-hour meeting also included Treasury Secretary Timothy F. Geithner and White House budget director Jack Lew, who are guiding bicameral talks about the tax cuts between the two parties. As of Sunday evening, no additional meetings of that group had been scheduled.

The House last week easily approved President Obama's preferred option - preserving the cuts only on income up to $250,000 a year. The Saturday night meeting came hours after the Senate was unable to do the same. House Democrats are scheduled to confer with their rank and file Tuesday evening.

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