By Alexander Bolton - 12/06/10 03:06 PM EST
Senate lawmakers expect a bipartisan group of negotiators to announce a deal in the coming days that would extend the Bush tax cuts for two years and federal unemployment benefits for up to a year.
One sign that a deal will emerge soon: Senate Majority Leader Harry Reid (D-Nev.) said he expects Congress to adjourn a week before Christmas.
Two outstanding issues in the talks are whether to extend the Make Work Pay and the college-tuition tax credits that were part of the 2009 economic stimulus package, according to congressional sources. Democrats favor the tax breaks, but Republicans have balked at their cost.
Those two items would cost an estimated $62 billion and $8 billion, respectively, to extend for one year, according to GOP sources.
Negotiations between the administration and congressional leaders slowed in anticipation of weekend votes on two Democratic tax plans. Rep. Dave Camp (R-Mich.), who is representing House Republicans in the talks, was spotted Friday morning on a flight to Detroit.
On Saturday, the Senate blocked, by a vote of 53-36, a proposal sponsored by Senate Finance Committee Chairman Max Baucus (D-Mont.) to extend current tax rates for families earning as much as $250,000 a year. The chamber also declined to consider a plan offered by Sen. Chuck Schumer (D-N.Y.) to extend tax cuts for families earning up to $1 million, voting 53-37.
Those votes clear the way for consideration of an expected deal under negotiation by Treasury Secretary Tim Geithner, White House budget director Jack Lew, Sen. Jon Kyl (R-Ariz.), Baucus, Camp and Rep. Chris Van Hollen (D-Md.).
Senate Democratic Whip Dick Durbin (D-Ill.) said his colleagues appear poised to agree on a two-year extension of all the Bush tax cuts, noting that Republicans have left few options available.
“We're moving in that direction,” Durbin said on CBS’s “Face the Nation.” “And we're only moving there against my judgment and my own particular view of things. But it appears now the Republican position is — and it has been consistent, I will say it for them, they saw it — we saw it yesterday in the Senate, is we have to continue the Bush economic policies.”
White House officials have also been negotiating on the side with the Senate Republican leadership, which filibustered the two Democratic tax plans on Saturday.
Senate Democrats wanted to state their positions for the record by voting on the Baucus and Schumer proposals before a two-year extension of all the Bush tax cuts.
Some liberal Senate Democrats want to play hardball with Republicans by holding firm to their position of extending rates only for families earning less than $250,000. These Democrats are willing to let tax rates for all income earners reset in January to the higher levels of the 1990s if Republicans refuse to split middle-class tax cuts from those for the wealthiest families.
Sen. Tom Harkin (D-Iowa) said he would be willing to allow tax rates to reset or the government to shut down if that’s what Senate Republicans threaten to get Democrats to agree to tax cuts for the wealthy.
“They’re willing to shut the government down in order to get tax breaks for the wealthy, I say let them do it,” he said.
But the White House has taken a strong stance against risking higher tax rates for middle-income earners, even if Congress could lower them again early next year before April 15.
“The White House has been adamant about not letting the middle-class tax rates expire,” said a Democratic aide.
While lawmakers wait for the announcement of a bipartisan deal, Senate Majority Leader Harry Reid (D-Nev.) will move forward on other legislation Democrats promised to constituents during the campaign.
Reid said he would file a motion on Monday to bring the DREAM Act — which would grant residency to the children of illegal immigrants who meet certain conditions — to the floor by midweek.
Reid also hopes to hold votes on the New START treaty as well as the defense authorization bill, which includes a repeal of “Don’t ask, don’t tell” policy, which bars gays from serving openly in the military.
Reid, however, said he planned to adjourn the chamber by Dec. 17.
Kyl, who has emerged as the lead GOP negotiator with the administration on the New START treaty, said a tax deal would need to be struck by early this week to give the Senate enough time to ratify the arms control agreement by Christmas.
J. Taylor Rushing contributed to this report.