Tax cuts: Republicans and Democrats clash over Obama's plan

Tax cuts passed under President Bush are about to expire, prompting a fierce partisan battle over whether they should be renewed.

Republicans and Democrats clashed Monday over soon-to-expire tax cuts, an issue expected to dominate the U.S. political landscape in the weeks leading up to congressional elections in November.

Democrats are worried that these elections could hand the Republicans control of the House of Representatives and perhaps the Senate. The White House and its Democratic allies hope to use the tax cut fight to cast themselves as defenders of the middle class and Republicans as a party eager to revive the days of the still unpopular former President George W. Bush.

"We're going to take the next 50-some days to convince the public that's exactly what the Republicans would do — back to the Bush policies," said White House Press Secretary Robert Gibbs said on NBC television's "Today" show.

Gibbs said the middle class should not be used as a political football by Republicans maneuvering to give tax cuts to wealthy taxpayers, who he said do not need the reductions. Republicans say paring taxes for the wealthy would encourage them and the businesses they operate to create jobs.

A spokesman for Senate Republican Leader Mitch McConnell said that every Senate Republican has pledged to oppose President Barack Obama's tax-cutting plan. Obama would renew the tax cuts for most people but let the top income tax rate rise back to almost 40 percent on family or small business income over $250,000.

McConnell has said a bill extending the tax cuts for only low- and middle-income earners cannot pass the Senate. Forty-one senators can block a bill with delaying tactics, but McConnell spokesman Don Stewart declined to say whether all 41 Republicans in the 100-member Senate would support such a strategy.

At issue is a year-end deadline to renew a variety of tax cuts enacted in 2001, when the federal government was running a budget surplus.

On Sunday, House Republican Leader John Boehner said he would support renewing tax cuts for the middle class but not the wealthy if that was his only choice, an indication Republicans are not united on the issue.

Congressional analysts say renewing the tax cuts for everyone would cost the government $4 trillion over the next decade. With polls showing a broad public anger over spiraling federal deficits, Obama wants to exclude individuals earning more than $200,000 and couples making more than $250,000. Those categories account for $700 billion of the total projected cost.

"That's a debate we're happy to have," McConnell told The Washington Post. "That's the kind of debate that unifies my caucus."

Democrats are not unified behind Obama and their House and Senate leaders. Several Senate Democrats say they would like all of the Bush tax cuts to be extended for another year or two as the economy slowly recovers from the recession.

"I don't think it makes sense to raise any federal taxes during the uncertain economy we are struggling through," Sen. Joe Lieberman, an independent who aligns with Democrats, said Monday. "The more money we leave in private hands, the quicker our economic recovery will be. And that means I will do everything I can to make sure Congress extends the so-called Bush tax cuts for another year."

Treasury Secretary Timothy Geithner on Monday also urged Congress to move quickly to extend the tax cuts.

Geithner and the administration have tried to make the case that conditions would have been worse without Obama's economic policies, including an $814 billion stimulus package. Geithner said a return to Republican policies would put the economic recovery in jeopardy.

"We can't afford to go back to the policies of the past decade when we passed large tax cuts for the wealthiest Americans without paying for them and saw little impact on job creation and years of stagnation in middle class wages," he said.

Republicans say the level of spending undertaken by the Obama administration has done little to boost the economy. Instead, it has increased the deficit to unsustainable levels, they say.