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Centrist Democrats Fear Tax Cut Follies

Several House Democrats are raising doubts about leadership plans to hold a vote to extend only middle-class tax cuts, saying the strategy — designed to bolster Democrats’ 2012 election prospects — could backfire.

President Barack Obama’s 11th-hour decision to tap Treasury Secretary Timothy Geithner and Budget Director Jacob Lew to lead a bipartisan group charged with seeking compromise on the 2001 and 2003 Bush-era tax cuts did not appear as of late Tuesday to have changed House Democratic leaders’ plans to schedule a symbolic vote this week on extending the tax cuts for individuals making less than $200,000 a year and families earning less than $250,000 a year.

House leaders argue that the vote — which they say the majority of the Caucus wants to have and will support — will help Democrats make the case that they are on the side of the middle class and draw a contrast with Republicans, who want an across-the-board extension of the tax cuts for all income brackets. The tax cuts expire at year’s end.

But some centrist Democrats, who prefer a short-term extension of tax cuts for all income brackets, worry that having a vote this week on just the middle-class tax cuts leaves them vulnerable to GOP attacks claiming that they effectively supported a tax increase for higher wage earners.

Compounding their frustration is the fact that there almost certainly will not be 60 votes in the Senate to pass just the middle-class tax-cut extension. Some centrist lawmakers are questioning why Speaker Nancy Pelosi and her leadership team would press ahead with a strategy that many say contributed to the 63-seat loss that House Democrats suffered
Nov. 2.

“So many of the votes that were cast hurt so many of our Members that are no longer here that you’d think we would have learned from those mistakes,” said Rep. Heath Shuler, a leader of the conservative Blue Dog Coalition.

The North Carolina Democrat — who garnered 43 votes Nov. 17 when he staged a protest bid for Minority Leader in the 112th Congress against the California Democrat — said he preferred a short-term extension for all income brackets that was fully paid for, but that “the most important thing is what can the Senate ultimately do.”

Another Blue Dog leader, Rep. Mike Ross, also said he was troubled by talk of a middle-class tax vote.

“You would think they would have learned a lesson on Nov. 2 from that,” the Arkansas Democrat said. “I saw a lot of good friends get beat in this last election because they were forced to take votes that we knew weren’t going anywhere in the Senate. I don’t know why you would force Members to cast a vote on something that you know is going to die in the Senate.”

House leaders have been loath to tip their hand on their strategy for dealing with the tax cuts, beyond the straight middle-class tax vote tentatively planned for this week. But aides have speculated that House leaders could ultimately take a cue from whatever passes out of the Senate.

Rep. Gerry Connolly said he wants a one- or two-year extension of all the tax cuts “until the economy is in more robust shape.” But the Virginia Democrat said he would vote for extending just the middle-class tax cuts if given no other option and predicted that many of his like-minded colleagues would do so as well because “they don’t want to go on record as opposing a middle-class tax cut.”

Connolly, who narrowly escaped defeat on Election Day, groused about plans to hold a vote on yet another bill that would be dead on arrival in the Senate.

“Once again, we’re going to be in a position where we’re going to have a vote that is not going to be replicated, not even taken up in the Senate,” he said. “And I have a lot of trouble with that.”

Following a two-hour White House meeting with Congressional leaders Tuesday, Majority Leader Steny Hoyer (Md.) said House leaders still hoped to have a vote this week limited to the middle-class tax cuts.

Pelosi reiterated her opposition to extending tax cuts for higher earners, saying in a statement that “Democrats continue to have concerns about the impact on the deficit of giving a tax cut to the nation’s wealthiest 2 percent.”

Obama announced that Geithner and Lew would begin meeting with representatives of both parties immediately and holding negotiations “to break through this logjam” over the cuts, which expire at the end of the year.

But compromise will likely be hard to come by, as House Republicans are dug in on their opposition to allowing any of the tax cuts to expire. Speaker-designate John Boehner (Ohio) said that during the White House meeting, he and other GOP leaders reiterated their belief that “stopping all looming tax hikes and cutting spending would, in fact, create jobs and get the economy moving.” And earlier Tuesday, Majority Leader-designate Eric Cantor (Va.) said Republican leaders would urge their Members to vote against a Democratic proposal to extend just the middle-class tax cuts.

Meanwhile, in the Senate, Obama’s creation of the bipartisan panel threw Democrats’ efforts into chaos. Majority Leader Harry Reid agreed to put off making a decision on how he would move forward for a few days to allow the panel time to try to forge a compromise.

The Nevada Democrat had hoped to come to an agreement with his Democratic colleagues on a path forward during a closed-door meeting Tuesday, but he told reporters that he agreed to delay his decision to “show the American people that we are trying to work in good faith and come to a bipartisan agreement.”

But Reid warned that if the bipartisan group is unable to reach an agreement, Democrats would “move forward with what we feel is best for the American people.” A Senate Democratic aide said Reid’s offer to wait would likely last only a few days. 

Still, the delay throws into doubt whether Senate Democrats will join their House counterparts in forcing a vote on extending only those tax cuts that apply to the middle class. With Republicans unified in opposing that option, the vote in that chamber would also be a largely symbolic one aimed at creating a contrast between Democrats and Republicans on the issue.

Jennifer Bendery contributed to this report.

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