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Washington • The Obama administration said Thursday that it wanted an extension of unemployment assistance and a variety of tax breaks for low-wage and middle-income workers as part of a deal with congressional Republicans to extend all the Bush-era tax cuts.
But it is unclear how much leverage the White House has in the tax negotiations, given the drubbing Democrats took in the midterm elections, the tight congressional calendar and a threat by Senate Republicans to block any other legislation until the tax fight is resolved.
In a symbolic nod to President Barack Obama's pledge to let the tax cuts on upper-income brackets expire on Dec. 31, as scheduled by law, the House Thursday approved a bill to continue the lower tax rates enacted during the Bush administration for Americans they described as "middle class." The vote was 234-188. All but 20 Democrats voted in favor of the bill; all but three Republicans opposed it.
The bill, however, has no chance of passage in the Senate, where even some Democrats say the tax cuts should be extended for everyone, at least temporarily, given the continued weakness in the economy.
Republicans, meanwhile, expressed dismay at the posturing by Democrats, which they said was delaying the inevitable and even getting in the way of a potential deal on jobless aid for millions of unemployed Americans whose benefits have started to run out. Obama's Council of Economic Advisers estimated that if Congress does not extend the jobless benefits, 2 million unemployed workers will lose coverage this month and 7 million will by November 2011. With federal unemployment aid having expired on Tuesday for 2 million Americans, Obama is seeking a one-year extension. Senate Republicans on Wednesday blocked an effort by Democrats to take up a bill extending the benefits.
At the White House, administration officials outlined a list of their demands for an extension of expiring tax breaks, including the $800-per-couple "Making Work Pay" tax credit for about 110 million households, a tuition tax credit for 8 million college students and the earned-income tax credit and child-tax credit for 15 million low-income families. They also listed expiring tax breaks for small businesses. They said those tax credits would have a greater impact on the economy than continuing the Bush tax cuts on upper income levels.
Treasury Secretary Timothy Geithner and White House Budget Director Jacob Lew began holding closed-door meetings Wednesday with a small group of lawmakers from both parties to negotiate a deal on the Bush tax cuts. Those talks continued Thursday, even as the House voted on the Democratic plan.
Democrats said the House vote wouldn't undermine bipartisan negotiations.
"We are putting this bill on the floor today because we believe it is important to extend tax cuts for the middle class," said Rep. Chellie Pingree, D-Maine. She said tax cuts for the wealthy have done nothing to stimulate the economy.
"It's time that we let those end," Pingree said.
Rep Dave Camp, R-Mich., one of the negotiators in the private talks, said the House vote was futile.
"It would be comical if it weren't so irresponsible," Camp said. "Their position is so precarious they won't even allow Republicans to offer amendments or any alternative. Why? Because Democrats know the Republican bill to extend the current tax rates for all taxpayers would pass with broad bipartisan support."