Both parties block quick votes on Obama tax plan

Introduction

WASHINGTON (AP) — In a day of political maneuvering, Democrats and then Republicans took turns blocking a quick Senate vote on President Barack Obama’s proposal to extend expiring tax cuts for a year on everyone but the highest-earning Americans.

With each side trying to embarrass the other on one of the election year’s foremost issues, the result was that senators won’t vote on Obama’s plan this week. Senate Majority Leader Harry Reid, D-Nev., promised they would vote on it before Congress leaves town for its August recess, despite GOP opposition to the proposal.

“We know Republicans won’t do anything that helps President Obama, even if it’s good for the economy, because their No.1 goal is to defeat the president,” Reid said.

Republicans accused Democrats of blocking the vote because they were afraid of supporting a measure that would in effect boost taxes on high-earning business owners at a time when the country is thirsting for jobs.

Senate Minority Leader Mitch McConnell, R-Ky., said he would agree to arrange for votes “just as soon as the majority leader produces a bill to show us what tax increases they have in mind.”

The moves came just two days after Obama urged Congress to vote on his proposal. The president would exclude families earning over $250,000 a year from the renewed tax cuts, saying they should contribute to deficit reduction.

Without action by lawmakers, wide-ranging tax cuts enacted a decade ago under President George W. Bush will expire on New Year’s Day, which economists say would be a blow to the already weak economy.

The back and forth put the Senate on track to voting Thursday or Friday on a Democratic bill cutting taxes for businesses that hire workers, grant raises or make major investments in equipment. It will also vote on a House-passed GOP version that grants tax deductions to all companies with fewer than 500 employees.

Both measures seem destined for certain defeat.

Wednesday morning, Senate Minority Leader Mitch McConnell, R-Ky., proposed votes on two amendments to the Democrats’ business tax-cut bill.

One was on Obama’s plan, the other on a Republican alternative that would include top earners in the extended tax reductions. Republicans say excluding the highest earners would raise taxes on many business people and stifle job creation.

Reid blocked the votes on both for now, at a time when a handful of Democrats — including several in tight re-election races — are wary of supporting Obama’s proposal because their GOP opponents label it a tax increase. Democratic aides said they would vote on the measure by early August, after Obama spends more time bringing public attention to his proposal.

“The president’s tax increase plan is not just an economic disaster, it’s a political loser and they know it,” said Sen. Orrin Hatch, R-Utah, sponsor of the GOP proposal.

Later Wednesday, it was Reid who proposed holding separate votes on Obama’s plan and the rival GOP measure. He had a new condition: Letting either measure pass with a simple majority, instead of the 60 votes demanded for many Senate roll calls.

McConnell objected, saying he had not seen details of the bills.

Reid can usually count on votes from 51 Democrats plus two independents.

Late Wednesday, Sen. Joseph Lieberman, I-Conn., who is retiring in January, said he would vote against both parties’ tax-cut extensions, saying Congress should instead be working on a major deficit-reduction package. Other Democrats have been unclear about whether they will back Obama’s plan, including Sens. Joe Manchin of West Virginia and Jon Tester of Montana, who face tight re-election races in November.

“We’ll get to the tax issues,” Reid said. “That way we’ll be able to talk in more detail about Gov. Romney’s taxes,” a reference to Democratic demands that wealthy GOP presidential challenger Mitt Romney release more of his income tax returns.

Trying to take the offensive, Obama’s re-election campaign released a television ad it will air in nine states where the election could be close, contrasting the middle-income tax breaks Obama has proposed with the tax cuts Romney’s plan would provide for wealthy individuals and corporations. “Two plans, your choice,” the announcer says.

Out of 119 million U.S. households, just 2.5 million — or 2 percent — reported making at least $250,000 in 2010, according to Census Bureau figures.

Just 3.5 percent of taxpayers reporting business earnings will earn enough money to see their tax rates rise next year unless lawmakers act, according to Congress’ nonpartisan Joint Committee on Taxation. Democrats use that figure to show how few businesses would pay higher tax rates under Obama’s plan.

The committee also estimated that those taxpayers will account for 53 percent of the $1.3 trillion in business earnings reported in 2013 — a number Republicans cite to argue that the higher rates will hurt the economy.