Senate Blocks Democrats on Middle Class Tax Cut; Obama Still Confident of Deal

Republican senators, joined by a handful of moderate Democrats, led a filibuster Saturday to block consideration of two Democratic proposals to permanently extend the expiring Bush tax cuts for all but the highest earners, arguing that the Bush-era cuts should be extended for all income levels.

In a rare weekend session, senators voted 36 to 53 against moving to a House-passed bill that would have extended the Bush-era tax reductions for everyone making less than $250,000, as well as the first $250,000 of income for higher earners. That was seven votes short of the three-fifths majority (60) needed to break the filibuster. Four Democrats-- Joe Manchin of West Virginia, Jim Webb of Virginia, Ben Nelson of Nebraska, and Russ Feingold of Wisconsin-- voted with the Republicans to block action on the bill, as did Sen. Joe Lieberman, an independent from Connecticut.

Later, by a 37 to 53 vote, the Senate also stopped consideration of "the Millionaires' Tax," a bill that would have extended the Bush tax cuts for every American making less than $1 million per year, while returning income taxes to 2001 levels for everyone making more than $1 million annually. Democratic Sens. Richard Durbin of Illinois, Tom Harkin of Iowa, Jay Rockefeller of West Virginia and Feingold, along with Lieberman, voted with the Republicans.

President Obama said he was "very disappointed" in the Senate votes, but he added that what happened Saturday "cannot be the end of the discussion" on tax relief. He vowed to continue working for a compromise with the Republican side, "to give the American people the peace of mind that their taxes will not go up on Jan. 1" -- the time set in law for the tax cuts to expire without congressional action. "I'm confident we can do it," he said.

Sen. Charles Schumer (D-N.Y.) sponsored the bill that applied to people with more than $1 million in annual income only and defended his proposal Saturday as an important way to address the nation's ballooning debt.

"It seems to me that about the best way to reduce the deficit is not to give $300 billion dollars of tax breaks to the 315,000 Americans whose income is over $1 million dollars." Schumer said. "It's not that we want to punish wealthy people. We want to praise them. But they're doing fine."

Sen. Bernie Sanders, the liberal Vermont independent who caucuses with the Democrats, argued that the Senate could better protect the economy by extending the lapsed unemployment benefits that Republicans are blocking because Democrats have not offered cuts elsewhere in the federal government to pay for them. Sanders framed the two issues together as one a question of basic fairness.

"I think this is a very easy vote. The vote is to extend the tax breaks to 98 percent of Americans, many of whom are struggling," Sanders said. "But lets us not give tax breaks today to the millionaires and billionaires of this country, who in many ways have never had it so good."

But while the Democrats argued that their legislation would make the tax code more fair, Senate Minority Leader Mitch McConnell said that all Americans should have have their tax rates kept at current levels. He also dismissed the entire Saturday session as a political exercise, since the Democrats knew the proposals would draw a Republican filibuster, blocking final action.

"Americans don't want to see meaningless theatrics in Congress," McConnell (R-Ky.) said. "They want us to do something about the economy... This Saturday session is a total waste of the American people's time."

Iowa Sen. Charles Grassley, the top Republican on the tax-writing Senate Finance Committee agreed. "Here we are on a Saturday. We don't need a dog and pony show on a Saturday when we ought to be giving certainty to the economy," he said. "The bottom line is this: Stop the tax hikes."

As Democrats and Republicans continue to spar over the issue, time is running out for them to find a solution. If Congress fails to come to an agreement before the end of the year, rates for all Americans will return to 2001 levels when the Bush-era policy expires after Dec. 31. In addition to income tax hikes, the changes would increase the estate tax, the marriage penalty tax, taxes on dividends and capital gains, and the Alternative Minimum Tax.

While Democrats pushed their floor votes this week, a bipartisan group of senators and House members met behind closed doors with the Obama administration to hammer out a compromise on the tax issue. Vice President Joe Biden, filling in Saturday for Obama in the White House weekly address, made no mention of the negotiations, but said if the tax cuts aren't extended "millions of middle-class families will see a big bite out of their paychecks starting Jan. 1. And that's the last thing we should let happen."

Media reports indicated late last week that a deal had been reached to pass a two-year extension of all the tax cuts, along with a one-year extension of unemployment benefits, and the also new START nuclear arms treaty. But senior Senate aides familiar with the negotiations tell Politics Daily that Republicans feel little pressure to give in to Democratic priorities when they feel confident they can prevail on the tax issue without concessions.

Sen. Jon Kyl (R-Ariz.) said Saturday morning that no deal would be reached until Democrats stop scheduling votes on issues they know Republicans will oppose.

"The fact is we're not going to be negotiating anything until all of this political process is over, until all of the political votes have been cast and then, and only then, can we seriously negotiate how we're going to resolve the issue." Kyl said.

Just before the vote, an exasperated Senate Majority Leader Harry Reid spoke from the Senate floor to accuse Republicans of changing their demands during negotiations and compared GOP senators to Lucy, the character in the Peanuts comic strip who yanks the football out from Charlie Brown before he can kick it.

"Our economy isn't a cartoon. The jobs of hardworking Americans aren't political footballs," Reid said. "And instead of taking their ball and going home when they don't get their way, it's time Republicans realize that we're not here to embarrass one another. We're here to get things done. We're here to help our economy grow once again."

Reid went on. "It's time Republicans recognize that, like Charlie Brown and Lucy, we're on the same team."