Pelosi Says House May Vote Next Week on Tax Cuts

Following the Senate Democratic leaders' decision to postpone a vote on extending Bush-era tax cuts, Speaker Pelosi said the House "will retain the right to proceed" as it chooses

(Bloomberg) -- House Speaker Nancy Pelosi said the House may vote next week on extending Bush-era tax cuts for most Americans in a pre-election showdown with Republicans over rates that expire at year's end.

"We will retain the right to proceed as we choose," Pelosi said today to reporters following the decision by Senate Democratic leaders to postpone a Senate vote on the issue until after the Nov. 2 election. "We will take it one day at a time," Pelosi, a California Democrat, said in Washington when asked about a possible House vote before the election.

Democrats and Republicans are locked in a dispute over who should be covered by a tax-cut extension. Democrats want to continue the lower rates for individual income up to $200,000 and up to $250,000 for couples filing jointly, which accounts for about 97 percent of taxpayers, according to Internal Revenue Service data.

Republicans want to keep the cuts for those in the higher income brackets as well, saying that would help sustain a U.S. economy still struggling to grow after the longest recession since the end of World War II.

Holding a vote on the Democratic plan before the election would give Republicans a choice to pass it or face attacks for opposing it.

Special Rules

Pelosi is considering using streamlined rules requiring a supermajority of two-thirds of those present, said a Democratic aide who briefed reporters. That procedure would keep Republicans from offering an amendment to extend the tax cuts for all income levels.

Such a Republican amendment might attract enough votes from Democratic lawmakers to pass, given that 31 House Democrats have called for a one-year extension of all tax rates.

House Republican Leader John Boehner of Ohio "has always believed we need to stop all of the tax hikes on American families and small businesses," spokesman Michael Steel said in an e-mail. If Pelosi "allows a free and fair debate there is a bipartisan majority in the House to do just that," he said.

Pelosi told reporters "there isn't a person in our caucus who isn't for tax cuts for the middle class."

Some House Democrats have voiced a preference for voting on the issue after the election. "If the Senate's not going to act anyway, I don't see any need for us to act" before the election, Representative Lloyd Doggett, a Texas Democrat, said yesterday.

Senate Postpones Action

Pelosi's comments followed yesterday's postponement by Senate leaders of floor action on the tax-cut extensions until Congress returns to Washington after the election.

"The reality is we're not going to pass" the tax cuts before the election, Illinois Senator Richard Durbin, the chamber's No. 2 Democrat, said yesterday. Blaming politics, he said, "We are so tightly wound up in this campaign" that Democrats and Republicans won't be able to reach an agreement.

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. 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.

Polls have shown Republicans poised to make significant House and Senate gains in this year's election.

'Wavering' Democrats

"I suspect the Democratic leadership thinks that wavering members will feel freer" after the election to support legislation that allowed the tax cuts to lapse for higher-income brackets, said Henry Aaron, a senior fellow at the Brookings Institution in Washington who studies congressional tax, health and economic policy. "The risk in that strategy is that the Democrats will emerge from the election shell-shocked and running for the hills."

Senate Democrats said they hit an impasse on whether to hold a vote before the election during a meeting yesterday.

"There's a divided caucus on the issue," said Connecticut Senator Christopher Dodd, who is retiring. Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said, "It's clear there aren't 60 votes for any proposal, so no proposal is going to pass at this point."

Sixty votes would be needed for a tax-cut extension to advance in the Senate. Durbin and Conrad spoke to reporters as they emerged from a closed-door meeting of Senate Democrats on the issue. "No bill was presented" on the tax cuts, said Senator Byron Dorgan, a North Dakota Democrat.

Holding 'Hostage'

White House spokeswoman Amy Brundage accused Republicans of "holding middle-class tax cuts hostage in order to borrow $700 billion for tax breaks to the millionaires and billionaires at a time of record deficits."

"The American people will be reminded of that every day,"

Brundage said.

Don Stewart, a spokesman for Republican Senate leader Mitch McConnell of Kentucky, blamed the delay on division within the Democrats' ranks.

"If anyone can show me where there's a Democratic bill to hold hostage, I'll buy them lunch," he said.

Senator Charles Grassley of Iowa, the ranking Republican on the Finance Committee, called the move to delay grappling with the tax-cut extension a "dereliction of duty" by Democrats.

The Senate "will come back in November and stay in session as long as it takes to get this done," Jim Manley, a spokesman for Majority Leader Harry Reid of Nevada, said in a statement late yesterday.

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