Lawmakers stand firm on taxes as talks start

By Stephen Ohlemacher

Associated Press

Published: Wednesday, Dec. 1 2010 8:21 a.m. MST

WASHINGTON — Democrats and Republicans are working to reach a deal to extend Bush-era tax cuts that expire at the end of the year, but neither side is budging as negotiations begin in earnest.

Even as they talk, House leaders are planning to hold a politically charged vote Thursday to extend middle-class tax cuts while letting taxes for the wealthy rise.

The bill, even if it passes the House, stands no chance in the Senate. Nevertheless, Senate Majority Leader Harry Reid, D-Nev., said he is considering holding a similar vote.

"House Democrats have long supported extending the tax cuts for America's middle class," House Speaker Nancy Pelosi said. "Democrats continue to have concerns about the impact on the deficit of giving a tax cut to the nation's wealthiest 2 percent."

President Barack Obama met with congressional leaders from both parties Tuesday at the White House to discuss taxes and other issues. Republicans and Democrats said it was a cordial, productive meeting. But both sides emerged with the same stances on tax cuts, a pending nuclear treaty with Russia and other pressing matters.

They agreed to appoint a bipartisan working group to discuss the tax cuts. The four lawmakers and two administration members won't have much time to come up with a deal to prevent sweeping tax increases that would hit taxpayers at every income level. The first meeting is Wednesday.

White House press secretary Robert Gibbs said Budget Director Jack Lew was going to Capitol Hill Wednesday, saying that Obama "believes we can find common ground." Gibbs said both sides on this dispute have a responsibility "to figure this out by the end of the year."

Appearing on morning network news shows, the spokesman also said he's confident that Obama can win Senate ratification of the New START nuclear pact before Christmas, saying Republicans increasingly are moving in the direction of supporting the treaty.

Obama and Democratic leaders in Congress want to extend tax cuts for individuals making less than $200,000 and married couples making less than $250,000. Republicans and some rank-and-file Democrats want to extend the tax cuts for everyone.

Obama signaled he was ready to compromise after elections in which Republicans won control of the House and gained seats in the Senate. But the president has yet to make a detailed proposal.

Senate Republicans, meanwhile, said they intend to block action on all Democratic-backed legislation until the Senate votes to the fund the government and prevent the looming tax increases, according to a letter to Reid signed by all 42 Senate Republicans.

If carried out, that strategy could doom Democratic-backed attempts to end the Pentagon's practice of discharging openly gay members of the military service and give legal status to young illegal immigrants who join the military or attend college.

Reid has made both measures a priority as Democrats attempt to enact legislation long sought by groups that supported them in the recent midterm elections.

Republicans have little incentive to make major concessions in December, considering their power on Capitol Hill will greatly increase in January. Democrats still control both chambers until the end of the year, but they need Republican votes in the Senate to pass a tax bill.

"If President Obama and Democratic leaders come up with a plan in the lame-duck session to cut spending and stop all the tax hikes, they can expect a positive response from Republicans," said House Republican leader John Boehner of Ohio, who is in line to become the new speaker in January. "If the lame-duck Congress is unable or unwilling to act, the new House majority will in January."

The president appointed Treasury Secretary Timothy Geithner and Budget Director Jacob Lew to the tax negotiating group. Rep. Dave Camp of Michigan, the top Republican on the House Ways and Means Committee, will represent House Republicans and Rep. Chris Van Hollen of Maryland will represent House Democrats. Sen. Max Baucus of Montana, chairman of the Senate Finance Committee, will represent Senate Democrats; Sen. Jon Kyl of Arizona, the second ranking GOP leader in the Senate, will represent Senate Republicans.

Gibbs appeared on ABC's "Good Morning America," CBS's "The Early Show," and NBC's "Today" program.

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