Bush tax cuts get all the attention as US lawmakers reconvene

With just 50 days left before midterm elections, Congress returns to an agenda targeting the No. 1 issue for voters: jobs and the economy. For both parties, it’s also a chance to engage the party base and firm up their case to voters to control the next Congress.

A vast to-do list includes all spending bills for the fiscal year beginning Oct. 1, a defense authorization bill that sets wartime priorities and repeals the Clinton-era “don’t ask, don’t tell” policy, a food-safety bill, a $30 billion package to help small businesses, and the first bid to repeal a tax requirement in the Obama health-care law deemed too burdensome for business.

Democratic leaders also have to decide whether to take to the floor President Obama’s $50 billion infrastructure spending plan and a nearly $300 billion package of business tax breaks, which were announced in Milwaukee and Cleveland last week. So far, response has been cool.

But for now, the top issue is whether to permanently extend the 2001 and 2003 Bush tax cuts, set to expire on Dec. 31. In fact, the two parties are not far apart. Both Republicans and Democrats back extending tax cuts for some 97 percent of taxpayers. The catch is the last 3 percent, representing individuals earning more than $200,000 a year and families earning more than $250,000.

The cost of extending tax cuts to this top income group would be $700 billion over the next 10 years.

“The Democratic agenda has been disastrous for the economy – 2.5 million jobs lost, $2.5 trillion more in debt – and now they want to drive another nail in the coffin: a massive tax hike on the very people who can dig us out of this recession,” said Senate Republican leader Mitch McConnell in a floor speech after the Senate convened Monday afternoon.

House Republican leader John Boehner said on Sunday that he is open, if necessary, to renewing the Bush tax cuts for the 97 percent, even if it means not extending those cuts to the top 3 percent. But so far, no GOP leader has joined him.

Senate Republican leaders claim to have all the votes they need to block a House bill that raises taxes for any American during a recession. “What Mr. Boehner answered was a House-specific hypothetical,” says Don Stewart, a McConnell spokesman. “In the House oftentimes, the majority will force a vote on something with no alternatives. In the Senate, we don’t have that situation.”

Moreover, five senators who caucus with Democrats have already announced that they oppose a bill that does not reduce taxes for all income levels. The five are Sen. Joseph Lieberman (I) of Connecticut and Democratic Sens. Evan Bayh of Indiana, Kent Conrad of North Dakota, Ben Nelson of Nebraska, and Jim Webb of Virginia.

Until Sunday, Boehner had insisted that Republicans would oppose any measure that did not permanently extend all tax cuts. On Monday, Grover Norquist, president of Americans for Tax Reform, hailed Boehner’s subsequent move as simply good strategy. “Our position is we’re for cutting everybody’s taxes, but if the Democrats only put up one group of people for the tax cut to begin with, we will (1) vote for the bill and (2) ask for more,” he says.

“We don’t have the votes to do more. Now it’s up to Obama,” he added. “If he doesn’t extend the tax cuts for those earning more than $250,000, he has to face the voters that voted for him in the last election on something that cost them.”

But by Monday, House leadership staff said that Republicans are united on this point: “It is wrong to raise taxes in a recession. Period,” said Boehner spokesman Michael Steel in an e-mail.

The House is back in session Tuesday.

On Tuesday, the Senate takes up a long-stalled, $30 billion package of tax breaks and incentives for small business. Typically popular with Republicans, the Senate minority has been blocking the bill since June in a bid to get floor votes on more GOP amendments. With the support of GOP Sens. George Voinovich of Ohio and George LeMieux of Florida, Democrats expect to have the votes needed to break that filibuster.

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