Capitol Hill Bureau Chief
With a bruising election likely ahead of them and the economy proving resistant to any quick fixes, nearly two dozen moderate Democrats are pushing for a proposal on the expiring Bush tax cuts that was all-but-unthinkable to liberals a year ago -- extending all of the tax cuts, even those for the wealthiest Americas, at least for a while.
The number of moderates proposing the idea is far from a majority, but more than enough to scuttle President Obama's campaign promise to allow the Bush-era tax cuts to expire for individuals making more than $200,000 and for families making more than $250,000. If Congress fails to act before the end of the year, tax rates for all Americans will increase as they return to 2001 levels.
At least a dozen House Democrats, several Democratic candidates and four Democratic senators -- Evan Bayh of Indiana, Ben Nelson of Nebraska, Joe Lieberman of Connecticut and Kent Conrad of North Dakota -- have said they won't go along with the president's plan to allow the cuts to expire for the wealthiest Americans.
Nearly all of the Democrats pushing for an extension point to the ongoing recession as the reason not to let taxes increase for anybody this year. Bayh, who is retiring from the Senate at the end of the year, told Politics Daily he'd like to see an extension for at least a year to get the country through the recession.
Also in favor of an across-the-board extension of the cuts: Peter Orszag, Obama's former budget director.
Orszag wrote in the New York Times this week he favors keeping cuts in place for two years, then killing them to avoid driving the federal debt even higher than current estimates. A two-year extension of all of the Bush tax cuts would cost about $560 billion.
On Thursday, Nelson said in a statement that he wants to extend the cuts for all taxpayers, but did not specify a time frame for ending the cuts, saying only that they should last "until Nebraska's and the nation's economy is in better shape, and perhaps longer, because raising taxes in a weak economy could impair recovery."
Lieberman used the same reasoning in a recent interview with a Connecticut radio station. "We've got to be really cautious, because we don't want to do anything that would put the economy into a second dip and cause more loss of jobs," he said.
Conrad, who chairs the Senate Budget Committee and voted against the Bush tax cuts in 2001, has said that an extension of all tax cuts is necessary, at least for a while. "As a general rule, you don't want to be cutting spending or raising taxes in the midst of a downturn," he told the Wall Street Journal.
Although none of the four Democratic senators will face election this fall, the tax cuts have become a central issue in several tight House races, where moderate Democrats have distanced themselves from President Obama and his call to let the cuts for the wealthiest Americans expire.
"Party leaders are not my directors or my boss," Rep. Bobby Bright (D-Ala.) told the AP. "My boss is my constituents, and I've heard from a vast majority of my constituents that they don't believe in tax increases on anybody at this point in time." The conservative Bright has a strong Republican challenger this year and has already bucked his bosses on the health care vote, climate change and the stimulus bill.
Rep. Jim Himes (D-Conn.), another prime target for Republicans in November, said the recession makes raising taxes a dicey proposition.
"The economy has by no means fully recovered, so my bias is that those high-end tax cuts should be extended," he told the Connecticut Mirror
. Himes is a freshman Democrat who represents affluent Fairfield County in Connecticut. He narrowly defeated Rep. Chris Shays (R-Conn.) in 2008 and is locked in a tight race to defend his southwest Connecticut seat this year.
Rep. Gerry Connolly (D-Va.),who represents an affluent suburban district in Virginia, told NPR that the Democrats' willingness to raise taxes on wealthy Americans could hurt them in November. In 2008, 47 of the country's 59 most well-off districts voted for Obama.
"They're our voters, and the more some of my colleagues who represent some of those districts fully appreciate who we're talking about, perhaps that will give them pause to consider, I think a reasonable proposition, which is, don't allow those tax cuts to expire at this time," Connolly said.
In addition to the sitting members of Congress queasy about casting a vote on the issue, several Democratic candidates, including Jack Conway in Kentucky, Robin Carnahan in Missouri and Alex Sink in Florida, have said they would break with the president on the issue, saying they want the Bush cuts extended for all taxpayers, even the wealthiest, until the recession is over.
That position has not been well received in Democratic circles. Not only did the the president renew his call for ending the cuts for the wealthiest Americans on Thursday, White House Press Secretary Robert Gibbs also rejected moderates' argument that a tax hike on people making more than $250,000 would hurt the economy.
"There is not anybody in this country . . . that takes home half a million dollars a year that is delaying their purchasing decisions, OK?" Gibbs quipped during his Thursday press briefing. "The consumer demand is not impeded by the millionaire that can't make ends meet."
With the split in the party growing, talk among Democrats in Congress is narrowing in on how to find a compromise that could garner 60 votes in the Senate, which would require support from all Democrats and at least one Republican. Temporarily extending all of the tax cuts for one or two years seems to be the path that most Democrats say they could live with, but getting a vote on anything related to the issue before the November elections seems less likely every day.
Reagan LaChapelle, a spokeswoman for Senate Majority Leader Harry Reid, said a vote on extending at least some the Bush tax cuts is on a list of items her boss would like to bring up before the elections, but she could not guarantee a vote before November. "It's on the list, but we'll have to see what the Republicans are willing to let us do," she said.
LaChapelle said the Senate will convene for two "lame duck" sessions after the elections-- one in November and one in December-- to take up the chamber's unfinished business.
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