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GOP, Democrats Lay Out Tax Cut Stances

Two top surrogates for President Barack Obama found themselves in a political firestorm this week when they were accused by Republicans of breaking with the president in calling for an extension of the Bush-era tax cuts.

Although President Bill Clinton and former National Economic Council Director Lawrence Summers quickly walked back their comments, the damage was done: Republicans seized on the remarks to put pressure on Obama and Senate Majority Leader Harry Reid (D-Nev.) to act on a short-term extension of the 2001 and 2003 cuts before November.

The fuss served as a preview of the GOP’s election-year strategy, as the House lines up a July vote to extend all the cuts. Senate Minority Leader Mitch McConnell (Ky.) joined House GOP leaders to call on Obama to extend the tax cuts. McConnell said that in 2010 negotiations with Vice President Joseph Biden to extend the tax rates, the administration argued that the economy needed it. Now, he said, the economy is worse than it was then.

“It’s pretty obvious that the economy needs the certainty of the extension of the current tax rates for at least a year,” McConnell said.

“It’s really important that we provide certainty to job creators in our country,” Speaker John Boehner (Ohio) echoed.

Such a full extension will likely be one of the last votes Members take before they leave for the August recess. “Whenever the vote on stopping the largest tax hike in history occurs, I would hope that many Democrats join former President Bill Clinton and Republicans in opposing it,” Boehner spokesman Michael Steel said.

Democrats are already on guard. Rep. Robert Andrews (N.J.) conceded that forcing Democrats to vote on the subject “will put some in a tough political spot.” But, he added, “to run that sort of political play that close to an election in the midst of global economic turmoil is pretty bad and sick.”

The White House pushed back hard.

Speaking aboard Air Force One on Wednesday, White House Press Secretary Jay Carney said the president would only sign a bill to extend the Bush tax cuts for middle-income Americans who make up to $250,000.

Pressed whether that applied to temporary measures to give more time for compromise, Carney said the president “could not be more clear.”

“The president’s position is that we absolutely should extend the tax cuts for the middle class; we should not extend and he will not extend tax cuts for the highest-income Americans,” Carney said. “The question you should be asking is, will the Republicans force a tax hike on 98 percent of tax-paying Americans because they’re holding them hostage to tax cuts to the wealthiest Americans?”

According to a senior Democratic leadership aide, no decisions have been made about what Senate Democrats would do in response to House action on a one-year extension of all the cuts.

“We agree with the White House that Republicans run the risk of [sacrificing a] middle-class tax cut by linking it to a cut for millionaire and billionaires,” the aide said. “If they continue to insist on tax cuts for millionaires and billionaires, it will be clear whose side they are on.”

One likely scenario would be that Senate Republicans push for a vote on the yearlong extension and Senate Democrats allow it but put up their own alternative — possibly an extension of the cuts for those making $250,000 or less and
$1 million or less.

Senate Democrats last held votes on those alternatives in 2010’s lame-duck session, with five Democrats voting with Republicans against each proposal. Both were defeated.

“The takeaway from those votes was that Republicans refused to compromise after Democrats offered to move in their direction by raising the threshold,” the aide said.

The aide argued that Republicans are seeking to shield themselves from that criticism by coming together on a one-year extension but cited recent internal polling showing that most Americans do not believe upper-income earners should keep the current tax cuts.  

Still, most in the Capitol acknowledge the issue will not be solved before the elections.

In an interview Tuesday, House Majority Leader Eric Cantor (R-Va.) tacitly acknowledged that much, if not all, of the House’s actions between now and the elections will be aimed at providing signals to the markets and voters of where Republicans stand on economic issues.

Cantor said that “prior to the election we will move on this issue of taxes,” although he did not express any optimism about the Senate taking it up.

“We’re not under any illusions they’re going to embrace our type of tax reform … which is part of why this election is so important,” he said, calling the tax vote “a stark signal that again we are a contrast with Obama.”

John Stanton contributed to this report.