Senate Republicans hold firm against Democrats' tax cut plan in vote

In a rare Saturday session, Democrats fall short of the support needed to extend tax cuts to all but the very rich. As pressure builds to reach an agreement, some lawmakers predict a compromise to temporarily extend all tax cuts.

Reporting from Washington —

In a rare Saturday session, Senate Democrats and Republicans remained at loggerheads over whether to extend the George W. Bush-era tax cuts to all taxpayers, ratcheting up the pressure on lawmakers to try to reach agreement before the tax cuts expire at the end of the year.

With Republicans unified in opposition, Democrats, as expected, fell short of the votes needed to overcome a filibuster and extend the tax cuts for all but the very wealthy.

An extension of the tax cuts to families earning less than $250,000 a year was defeated, 53-36, short of the 60 needed to limit debate. An extension of the 2001 and 2003 tax cuts to those earning less than $1 million annually was rejected, 53-37.

"This is the ultimate game of chicken," Sen. Claire McCaskill (D-Mo.) said after the vote.

President Obama said he was disappointed that the Senate did not make the tax cuts permanent for the middle class but is ready to "roll up my sleeves'' to try to work out a compromise before lower rates expire Jan. 1.

"With so much at stake, today's vote cannot be the end of the discussions,'' he said.

With the test votes out of the way, a bipartisan compromise might now be in the offing.

It could include the Republican goal of extending the tax cuts to all, perhaps for two or three years, as well as Democratic priorities, such as extending aid to the unemployed, and perhaps a Senate vote eagerly sought by President Obama on the new arms reduction treaty.

"We'll end up with a deal by the end of next week,'' Sen. Bob Corker (R-Tenn.) predicted.

"Ultimately they'll have to negotiate something with us,'' said Senate Republican Whip Jon Kyl of Arizona.

Sen. Dianne Feinstein (D-Calif.), who favors extending tax cuts for the middle class but not the upper income, said, "I think it's likely that the president will renew all of the tax cuts for up to two years.''

A number of Democrats remained adamantly opposed to extending tax cuts to the well-to-do.

"I think the president should draw the line in the sand, as he said many times in Iowa when he campaigned, ….$250,000 and no more,'' said Sen. Tom Harkin (D-Iowa.). "If taxes go up, it's not our fault. The Republicans are the ones who are denying a tax break for the middle class.'''

Rep. Frank Lautenberg (D-N.J.) added: "The GOP is holding everyone's tax cut hostage until Paris Hilton gets hers.''

The weekend vote, forcing senators to trudge to the Capitol on a cold day for votes that were preordained, heightened partisan tensions in a lame-duck session.

When Sen. Mark Begich (D- Alaska) gaveled the chamber into session at 8:15 a.m., only two other senators were present: Majority Leader Harry Reid (D-Nev.) and Democratic Whip Dick Durbin of Illinois.

Senate Minority Leader Mitch McConnell (R-Ky.) dismissed the "show votes'' as a waste of time. Ten Republicans didn't show up to vote.

Democrats argued that the deficit-ridden government cannot afford to extend tax cuts to the well-to-do.

"What this debate is about is whether or not we continue to take money from the middle class and working families of this country … in order to provide $700 billion over a 10-year period to the wealthiest people in this country,'' said Sen. Bernie Sanders (I-Vt.) "Do you really think that the CEOs on Wall Street who make hundreds of millions of dollars a year really need a tax break?''

Republicans argued that higher taxes, even for wealthy taxpayers, would set back the nation's economic recovery by hurting small-business owners.

Citing a still struggling economy, Sen. Lindsey Graham (R-S.C.) said, "This is not the time for our government to raise taxes on anybody."

Reid compared Republicans to Lucy holding Charlie Brown's football and yanking it away as he is about to kick it.

"It's obvious by now that our Republican friends have drawn their political strategy from this cartoon,'' Reid said. "We've all heard Republicans weep for the deficit … but what did the Republicans do? They pulled away the football and said rather than reduce the deficit, we'd really rather give an unnecessary, unwanted, unaffordable handout to the richest of the rich.''

Each party also carried its message to the airwaves.

"I just don't agree with the folks who've said we can't afford a lifeline for Americans who lost their jobs during the worst recession in generations, but we can afford to borrow hundreds of billions of dollars to extend tax cuts for the wealthiest 2% of Americans,'' Vice President Joe Biden said on the radio.

"That's bad economic policy, and it's also just simply wrong.''

In the Republican radio message, Sen. Mark Kirk of Illinois called on Democrats to heed the message sent by voters in last month's election: "not raise taxes and risk another recession.''

As talks continue between the White House and congressional representatives over a compromise agreement on the tax issue, Reid announced that votes could come as soon as Wednesday on a series of domestic priority measures for Democrats, including a youth immigration bill known as the Dream Act that would provide a path to citizenship to illegal immigrants who serve in the military or graduate from college.

Latino voters were widely seen as having helped Democrats to retain the majority in the Senate during last month's election rout, especially in Western states, including Nevada and California. Reid had promised a vote on the issue.
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For those of you that still buy in to the media spin that a deal will be worked out, please take the time to read this:

Pay-As-You go rule summary:

http://www.cbpp.org/cms/index.cfm?fa=vie....

Readers digest version: Any tax bill that cuts taxes must be offset by either spending cuts or other kinds of tax increases. A single member of the House may object to any bill or amendment that violates pay-go by raising a point of order.

Once the objection is raised, either a 2/3rd vote suspending the rules OR the rules committee (9 dems, 4 repubs) can vote to waive it with a majority vote AND the whole house has to approve a special order agreeing to waive pay-go rules.

Problem:

The middle class tax cuts were specifically exempted from pay-go rules. The others (income >250K) weren't. So to get any bill through the House, they will need a pay-go waiver unless nobody objects (unlikely, remember Dennis Kucinich and some other characters are there.)

From there, they will either need to get a waiver through the Rules committee (controlled by the Dems) after another vote to lay the groundwork, or get a 2/3rds vote to suspend the rules.

And THEN, the Senate will also need 60 votes to get around pay-go rules.

There is not a path for the extension of all the Bush tax cuts to go forward, unless the House Rules committee rolls over like a seal pup.
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About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.
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http://en.wikipedia.org/wiki/2010_United_States_federal_budget