Senator Dick Durbin of Illinois, the senate’s No. 2 Democrat, said negotiations over extending the Bush-era tax cuts also will include prolonging emergency unemployment benefits and other tax credits.
“I want to put a couple other things on the table,” Durbin said today on NBC’s “Meet the Press.” “We do have unemployment running out,” he said, and “I also want to make sure the earned-income tax credit, the childcare tax credit, and the ‘Making Work Pay’ tax credit are part” of the discussion.
At issue are tax cuts passed in 2001 and 2003 that are set to expire Dec. 31. Obama is scheduled to meet with Democratic and Republican congressional leaders Nov. 30 at the White House to discuss the legislative agenda.
Additionally, emergency jobless benefits that kick in after the initial 26-weeks of payments end will expire at the end of this month. Without congressional action, about 2 million Americans will lose the federally funded benefits, according to a Labor Department estimate.
Arizona Senator Jon Kyl, the chamber’s second-ranking Republican, said there is “an opportunity for us to sit down and negotiate a resolution to this that’s good for the economy.” Kyl also repeated a key sticking point for Republicans: “We don’t believe taxes should be increased on anyone.”
Obama has argued the country can’t afford indefinitely extending tax cuts for the wealthiest Americans, defined by the president as individuals making more than $200,000 and couples earning more than $250,000.
Obama on Tax Cuts
“I believe it is a mistake for us to borrow $700 billion to make tax cuts permanent for millionaires and billionaires,” Obama told reporters Nov. 14. “It won’t significantly boost the economy and it’s hugely expensive, so we can’t afford it.”
Republicans, who won a majority of House seats in the Nov. 2 elections and narrowed the Democratic margin in the Senate, are pushing to permanently extend all the current tax rates. While Obama has said he wants to permanently extend just the tax cuts on earnings up to $200,000 for individuals or $250,000 for households -- about 97 percent of all taxpayers, according to the Internal Revenue Service -- he has indicated he’s open to negotiations on achieving that goal.
“We should be focusing on what it takes to move this economy forward,” Durbin said. “We should not be worried about the discomfort of the wealthy.”
Unless Congress acts, marginal rates will increase for all income-tax payers. Tax credits benefiting families will be cut in half. The so-called married penalty that forces some couples to pay more than if they were single will be reinstated. Rates will rise on most dividends and capital gains, and a levy on estates valued over $1 million will be resurrected.
“What’s likely to happen is there will be an extension of the tax cuts for everybody for a period of time,” Senator Byron Dorgan of North Dakota, a Democrat who is retiring, said in an interview today on CNN’s “State of the Union” program.
Extending only the current rates for individuals earning less than $200,000 and couples making under $250,000 would add more than $3 trillion to the national debt over the next decade. Sustaining tax cuts for those with higher incomes would add an additional $700 billion to the debt over the next decade, Treasury Secretary Timothy Geithner has said.
An across-the-board extension of all Bush-era tax policies would cost the government about $5 trillion in foregone revenue and interest cost on the debt, the Congressional Research Service estimated last month.