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Democrats, Axelrod Say Obama Tax Plan to Pass After Election

Congressional Democrats and a top White House official said Congress will extend soon-to-expire tax cuts for low- and middle-income Americans after the Nov. 2 election. Republicans said the delay and the threat of higher taxes for top earners will hurt the economy.

Illinois Senator Richard Durbin said Democrats will come together to extend Bush-era tax cuts for the first $250,000 of a married couple’s income, including lawmakers who also want to keep the lower rates for high-earning Americans.

Durbin, the Senate’s second-ranking Democrat, said on CNN’s “State of the Union” program yesterday that “some Republicans” will also vote to keep lower taxes for only low- and middle-income taxpayers, as President Barack Obama proposes. At least five Senate Democrats and all 41 Republicans say Bush- era tax cuts should be extended across-the-board to help the economy recover from the worst recession since World War II.

Democrats control 59 seats in the Senate; party leaders last week said they would delay a vote until after November’s midterm elections, after concluding that, before the balloting, they wouldn’t find the 60 votes needed to advance the measure.

“Some Democrats would say, ‘Well, perhaps we would do it a little bit differently,’” Durbin said. “But if that position doesn’t prevail, and I don’t think it will, then the ultimate choice is going to be whether or not we have the $250,000 income threshold for these tax cuts.

Photographer: Jonathan Fickies/Bloomberg

Illinois Senator Richard Durbin. Close

Illinois Senator Richard Durbin.

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Photographer: Jonathan Fickies/Bloomberg

Illinois Senator Richard Durbin.

“I think at that time we’ll have the support of all the Democrats as well as some Republicans,” Durbin said.

All of the tax cuts enacted in 2001 and 2003 during President George W. Bush’s administration, including lower rates on wages and investments for all Americans, are scheduled to expire Dec. 31.

After Elections

Obama administration officials and Democrats in charge of Congress said a vote on the tax cuts won’t happen until after the Nov. 2 election. House Majority Leader Steny Hoyer, a Maryland Democrat, said on “Fox News Sunday” that a pre- election vote in the House would be a “specious act,” given the Senate’s inaction.

Republicans called for quicker action, saying business owners need more certainty to make plans. Indiana Republican Representative Mike Pence, on NBC’s “Meet the Press,” called for “an up-or-down vote” on the tax-rate extensions “before Congress adjourns for the political season.”

House Republican Leader John Boehner, of Ohio, said on “Fox News Sunday” that delaying a vote is “the most irresponsible thing that I have seen since I’ve been in Washington, D.C., and I’ve been here a long time.”

‘Day at a Time’

Speaker Nancy Pelosi on Sept. 24 left open the possibility the chamber would act, saying House Democrats were taking the issue “one day at a time.”

Goldman Sachs Group Inc. said in a research note released Sept. 22 that even a temporary failure by Congress to extend the cuts may erase U.S. economic growth in the first half of next year.

David Axelrod, Obama’s top political adviser, said Republicans, including Senate Republican Leader Mitch McConnell, will feel pressure from constituents between now and Election Day to pass the middle-income tax cuts and let lower rates expire for those earning over $250,000.

“I believe the pressure is going to build among the American people,” Axelrod said on ABC News’s “This Week” program. “I don’t believe Senator McConnell or anybody else is going to be willing to stand up to the American people and say, ‘We’re going to hold your tax cut hostage so that we can give another large tax cut to -- to millionaires and billionaires that we can’t afford.’”

Bad Idea

McConnell, of Kentucky, rejected Democratic charges that his party is holding up middle-class tax cuts in order to get lower taxes on the rich.

“The question is, do we want to raise taxes in the middle of a very, very tough economy?” McConnell said on the ABC program. “All the Republicans think that’s a bad idea and a substantial number of the Democrats think the same thing.”

Maryland Democratic Representative Chris Van Hollen, who is leading efforts to elect Democrats to the House, labeled as “nonsense” the Republican arguments that higher taxes on the wealthy would stifle job creation.

“Those tax rates are in effect right now,” Van Hollen said on NBC’s “Meet the Press” program. “They’ve been in effect for nine years. At the end of those nine years, we’ve seen losses of millions of jobs. So this story that somehow those breaks for the very folks at the top create these jobs is just nonsense.”

Democratic Effort

Democrats so far haven’t succeeded in forcing Republicans to choose between passing tax cuts that benefit 97 percent of taxpayers and facing political attacks for opposing them, said Henry Aaron, an economist at the Brookings Institution in Washington.

“The Democrats have allowed the debate to be framed as whether it is a good idea to raise taxes on anyone, even the rich, in a recession,” said Aaron, who favors extending lower taxes for all Americans for a year or two. That’s “not the territory where the Democrats should want the debate to be occurring.”

Connecticut Senator Joe Lieberman, an independent who usually caucuses with Democrats, said he supports extending the lower rates for everyone.

“I don’t think this is the time to raise anybody’s taxes, including those who are wealthiest,” Lieberman said on CNN.

Lieberman said delaying action creates a “possibility” the cuts will expire and everybody’s taxes would go up. “I think when we come back in November or December, the first thing is we’ve got to extend these tax cuts.”

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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