Mon, Dec 06, 2010 - Page 7 News List

Senate fails in bid to renew tax cuts

LAME DUCk CONGRESS:It is estimated that extending all the Bush tax cuts would cost about US$3.6 trillion over a decade, including a US$700 billion giveaway to the wealthy


Democratic measures to extend tax cuts for a majority of citizens failed in the US Senate on Saturday as Republicans — and some Democrats — blocked them because they failed to extend low rates for the wealthy.

US President Barack Obama said he was disappointed with the vote, but indicated he was open to compromise on the tax cuts enacted under former Republican president George W. Bush, if certain conditions were met.

The Democratic plans — to renew low tax rates for individuals with income up to US$200,000 and for those making up to US$1 million — failed in procedural votes, as Republicans said low tax rates for the wealthiest should also be extended.

Obama and other Democratic leaders want to extend only the cuts for low and middle-income groups, contending the tax breaks for the wealthy would add too much to the yawning budget deficit.

Republicans, who dismissed Saturday’s vote as a political stunt because the measures had been expected to fail, argue that raising taxes for the rich is a mistake that would cost jobs.

“Those provisions should have passed,” Obama told reporters. “I continue to believe that it makes no sense to hold tax cuts for the middle class hostage to permanent tax cuts for the wealthiest 2 percent of Americans — especially when those high-income tax cuts would cost an additional US$700 billion that we don’t have and would add to our deficit.”

He said negotiators needed to “redouble” their efforts to ensure middle-class citizens did not face higher taxes on Jan. 1.

A White House official said Obama told Democratic congressional leaders on Saturday that he was open to compromise but would oppose even a temporary extension if it did not include an extension of benefits for the unemployed and of other tax cuts that benefit middle-class families.

Senate Majority Leader Harry Reid said he hoped to come to a consensus on the tax issue by the middle of next week but offered no details. Senate Republican leader Mitch McConnell said after the votes he was “relatively confident” that bipartisan talks would lead to an across-the-board renewal of the tax cuts and that the only unknown was the length of the extension.

The votes came two days after the House of Representatives passed an extension of the lower tax rates on individual income up to US$200,000. All the lower tax rates enacted under Bush in 2001 and 2003 will expire at the end of this year if the US Congress does not act.

Republicans will take control of the House next month and have more seats in the Senate following the party’s gains in the Nov. 2 congressional elections.

The electoral shift has emboldened Republicans and led some Democrats, including Obama, to signal a willingness to move toward the Republican position on the Bush-era tax rates.

Obama’s top economic advisers and lawmakers are in talks on a potential deal that could renew all the lower rates for one to three years, according to congressional aides.

Democrats want a one-year renewal of jobless benefits for hundreds of thousands of citizens, which began to expire this week when Congress did not agree on an extension.

Extending all the Bush-era tax rates would cost about US$3.6 trillion over a decade, according to administration estimates. Keeping them for those earning US$200,000 and under would cost US$2.9 trillion, while preserving the lower rates benefiting the highest income groups would cost US$700 billion.

This story has been viewed 1276 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top