WASHINGTON — Democrats blocked a Senate vote Wednesday on President Barack Obama's plan to extend expiring tax cuts for a year for everyone but the highest-earning Americans, as the two parties maneuvered to try embarrassing each other on one of the election year's foremost issues.
The move came just two days after Obama urged Congress to vote on his proposal. Democrats plan to take up the president's proposal before Congress' August recess.
Without action by lawmakers, wide-ranging tax cuts enacted a decade ago under President George W. Bush will expire on New Year's Day, an outcome that economists say would be a blow to the already weak economy.
Senate Minority Leader Mitch McConnell, R-Ky., proposed votes on two amendments to a small business tax cut bill the chamber is debating. One was on Obama's plan, the other on a Republican alternative that would include top earners in the extended tax reductions.
Senate Majority Leader Harry Reid, D-Nev., blocked the votes on both for now, saying the Senate would return to them after it finishes the small business tax measure. Aides said Democrats want to focus now on the small business measure, which they view as a winning issue for them, and turn later this month to Obama's plan to extend the broader tax cuts, which they see as a draw for voters.
"We'll get to the tax issues," Reid said. "That way we'll be able to talk in more detail about Governor Romney's taxes," a reference to Democratic demands that wealthy GOP presidential challenger Mitt Romney release more of his income tax returns.
Obama would exclude families earning over $250,000 a year from the renewed tax cuts, saying they should contribute to deficit reduction.
Republicans say by excluding those people, the plan would in effect raise taxes on many business people and stifle job creation. Republicans said Reid blocked the votes to protect vulnerable Democrats seeking re-election this fall from having to vote on Obama's plan.
Sen. Orrin Hatch, R-Utah, said Obama's proposal "is not just an economic disaster. It's a political loser and they know it."
Out of 119 million U.S. households, just 2.5 million — or 2 percent — reported making at least $250,000 in 2010, according to Census Bureau figures.
An estimated 940,000 taxpayers reporting business earnings will earn enough money to see their tax rates rise in 2013 unless lawmakers act, according to Congress' nonpartisan Joint Committee on Taxation. That is just 3.5 percent of taxpayers reporting business earnings — a figure Democrats use to show how few businesses would pay higher tax rates under Obama's plan.
The committee also estimated that those 940,000 taxpayers will account for 53 percent of the $1.3 trillion in business earnings reported in 2013 — a number Republicans cite to argue that the higher rates will hurt the economy and job creation.