By Alexander Bolton - 12/02/10 11:02 PM EST
White House negotiators and congressional Republicans have the outlines of a deal to extend the Bush-era tax cuts and federal unemployment benefits, which would end a partisan stalemate on Capitol Hill.
Under the prospective deal, all the Bush tax cuts would be extended for two years and unemployment benefits would be extended for one, according to congressional sources. Also under consideration is an extension of the Make Work Pay and college-tuition tax credits that were part of the 2009 economic stimulus package.
Sen. Jon Kyl (Ari.), who is representing Senate Republicans in talks with the administration, downplayed talk of a deal — as did the White House.
“If there is [a deal], I’m not aware of it,” Kyl said.
“Any reports that we are near a deal in the tax cuts negotiations are inaccurate and premature,” the White House said in a statement Thursday afternoon.
Senate lawmakers say the most likely scenario is to vote first on several tax proposals that would give them a chance to put their policy preferences on the record.
Senators would vote on President Obama’s proposal to extend the Bush era tax cuts only for families earning less than $250,000, then on a plan offered by Sen. Chuck Schumer (D-N.Y.) to extend tax rates only for families making less than $1 million.
The third vote would be on the proposal offered by Senate Republican Leader Mitch McConnell (Ky.) to permanently extend all of the tax cuts passed in 2001 and 2003.
All three proposals are expected to fall short of the 60 votes needed to overcome a Senate filibuster.
After those votes are held, the Senate would consider an expected deal under discussion by Treasury Secretary Timothy Geithner, White House budget director Jack Lew and congressional negotiators.
Geithner, Lew and congressional leaders may not announce that deal until after lawmakers have a chance to vote on the Obama, Schumer and McConnell tax proposals. This would allow lawmakers to put on the record where they think the line should be drawn for extending current tax rates.
The Senate may hold votes over the weekend to give them enough time to consider the tax proposals before an agreement emerges from the Gang of Six negotiators, which includes Senate Finance Committee Chairman Max Baucus (D-Mont.), Rep. Chris Van Hollen (D-Md.) and Rep. Dave Camp (R-Mich.) as well as Kyl, Geithner and Lew.
This is just one potential scenario, however. Democratic leaders continued to meet Thursday afternoon to plot their strategy over the next few days.
A senior Democratic aide predicted the votes on the Obama, Schumer and McConnell proposals would not happen until next week. But they could come over the weekend, depending on what agreement Democratic and Republican leaders reach on the floor schedule.
Resolution of the tax stalemate by the middle of next week would give senators time to debate and vote on the New START nuclear arms treaty in the lame-duck session.
McConnell has pledged that “100 percent” of the Senate Republican conference would oppose any tax legislation that extended rates for the vast majority of families but not the nation’s wealthiest. Republicans argue that raising taxes on families earning more than $250,000 or even $1 million would put a tax burden on small businesses.
A senior Democratic lawmaker said it would be too disruptive to the economy to allow all tax rates to reset to the level they were in the 1990s. Even though Democrats say Republicans would be to blame for holding middle-class tax cuts “hostage” to help millionaires, many are not willing to force the GOP to kill an extension of middle-class rates.
White House officials have remained firm, along with congressional Democrats, that middle-class tax rates should not be allowed to increase at the start of 2011, even temporarily, said a Democratic aide.
Some Democratic senators who are up for up for re-election in 2012 say it would be disastrous if the tax cuts were allowed to expire on Dec. 31.
“It would mean a lot of disappointed people,” said Sen. Ben Nelson (D-Neb.). “It’s the equivalent of shooting yourself in the foot while aiming.”
Nelson said the mid-term election results show that voters want Democrats and Republicans to compromise on tax policy and other issues.
“People want tax certainty and predictability, they don’t want showdowns in Washington,” said Nelson. “Eighty percent of the people polled around the time of the election said, ‘No matter how it turns out, we want Democrats and Republicans and independents to work together.’”
Kyl said the administration and congressional negotiators would need to agree to a deal on tax cuts by early next week to give the Senate time to take up the New START. Republican lawmakers say they want a week to consider the treaty.
White House press secretary Robert Gibbs predicted Wednesday the treaty would be ratified before Christmas.
Some Democratic senators, however, pledged they would oppose a deal that extended all of the Bush-era tax cuts, even temporarily.
“I am opposed to extending any tax breaks for anybody over $250,000, period. That’s where I am,” said Sen. Tom Harkin (D-Iowa). “I would hope that the president would stand firm on what he campaigned on in Iowa.
“The public is on our side on this, there’s no doubt about that,” he said. “If [Republicans] want to keep us here, I think we should stay here until Christmas Eve, Christmas Day.”