- The Washington Times - Sunday, September 26, 2010

Democrats said Sunday they will put off until after the elections a vote on whether to extend the Bush tax cuts, leaving most taxpayers in limbo for months as to whether they’ll face tax increases at the beginning of next year.

One key lawmaker floated a compromise, but for now a top Senate Democrat said support is not sufficient to extend only the lower-income tax cuts in the face of Republicans and Democrats who want to see all the tax cuts kept in place. And a top House Democrat said with no action from the Senate, there’s no reason for the House to take the vote now.

“We can count, and we know we don’t have 60 votes for our tax position,” Senate Majority Whip Richard J. Durbin, Illinois Democrat, told CNN’s “State of the Union” on Sunday. “We want to basically say after the election, when we still face a deadline by the end of the year, we’ll take up all of these tax issues. That to me is the only realistic way to address it.”

One swing lawmaker, Sen. Joe Lieberman, Connecticut independent, suggested a compromise - to extend the middle-class tax cuts permanently and extend tax cuts for higher-income taxpayers for a year or two, to carry them through the bad economy.

The cost of extending all the tax cuts is $3.7 trillion over 10 years. Both parties agree on extending about $3 trillion of those cuts, leaving the argument over the remaining $700 billion that would go to higher-income taxpayers, and it has become a defining issue heading into November’s elections.

The issue has confounded both parties at times, though Republicans seem to have become unified in arguing for the entire slate of Bush-era cuts to be extended.

They’ve been joined by a significant number of Democrats in both the House and Senate who say now is not the time to raise any taxes. Republicans said if a tax-cut bill were brought to the floor under open rules of debate, Congress would vote to extend all the cuts.

But Democratic leaders, not wanting to suffer a legislative defeat before the election nor to give up the additional federal revenue that would be lost if the tax cuts are extended, balked. They have accused Republicans of holding the middle-income tax cuts “hostage” in order to keep taxes low across the board, including for higher-income taxpayers.

Democrats said they will return for a lame-duck session of Congress after the elections, and vowed to tackle the issue then, after voters have made their wishes known.

“Democrats have absolutely pledged, and will make sure before the end of this year, the Republican increase on middle-income taxes will not go into effect,” House Majority Leader Steny H. Hoyer, Maryland Democrat, told “Fox News Sunday.”

Mr. Hoyer said he labeled it a “Republican increase” because under President George W. Bush, Republicans structured the 2001 and 2003 tax cuts to expire in 2010 in order to fit within budget rules.

In both of those years, Republicans weren’t able to muster the 60 votes to make the tax cuts permanent, so under budget rules they had to sunset eventually. This year, it’s Democrats who are in control and are having trouble mustering the 60-vote threshold to extend just some of the tax cuts.

Mr. Hoyer said that since Senate Democrats were putting off a vote, he would not force his chamber to vote on the measure, saying it would be “specious” to do so.

Senate Minority Leader Mitch McConnell, Kentucky Republican, said the blame for the situation falls entirely on Democrats, who have sizable majorities in both chambers.

“It was the Democrats themselves who decided not to have this debate,” he said on ABC’s “This Week” program. “The question is, do we want to raise taxes in the middle of a very, very tough economy? All the Republicans think that’s a bad idea, and a substantial number of the Democrats think the same thing.”

Waiting until after the election to act could raise the situation in which voters embrace Republicans’ policies, but Democrats who still control the chamber fight for their priorities.

Mr. Hoyer said that’s the way Congress works and that members are elected for a full term. Still, he said, “I don’t think we’re going to make any decisions against the will of the American public.”

If all the tax cuts are allowed to expire, then capital gains and dividend taxes would rise, and the income-tax brackets would revert to their levels in 2000. The lowest bracket would go from 10 percent to 15 percent, the highest tax bracket would go from 35 percent to 39.6 percent, and the middle brackets would be adjusted.

Democrats point to studies that suggest higher-income taxpayers are less likely than those on the lower rungs to pump savings into the economy through purchases, and so Democrats argue that only the lower-level tax cuts can be afforded.

Republicans say since small businesses often pay their taxes as personal income taxes, raising rates would hurt the people whom both parties are trying to help in the middle of the economic slump.

Earlier this month, House Minority Leader John A. Boehner, Ohio Republican, seemed to leave open the door for agreeing to extend just the lower-income tax cuts, if that was the only option Democrats would allow.

But on Sunday he said he’s confident if Democrats allow a full debate, a majority of lawmakers will vote to extend all the cuts, and he said he’ll hold out for that outcome.

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