Senators says tax cut, unemployment deals possible before Congress ends session

CNN Wire Service

WASHINGTON — Top senators from both parties indicated Sunday that a deal was likely soon on temporarily extending Bush-era tax cuts for all Americans, along with unemployment benefits that have expired.

However, Republican senators made clear they are unlikely to budge in their opposition to other Democratic priorities in the final weeks of the lame-duck session of Congress that ends in early January.

Senate Minority Leader Mitch McConnell, R-Ky., told the NBC program “Meet the Press” he was “optimistic” about an agreement on the tax rates and jobless benefits, but added there likely wasn’t time for the Senate to ratify a new nuclear arms treaty with Russia or complete work on a major defense bill that includes repeal of the “don’t ask, don’t tell” policy banning openly gay and lesbian soldiers.

Democrats, stymied by the ability of Senate Republicans to filibuster their agenda, shot back with angry words.

“I hope Americans will understand how craven and empty and hollow and contradictory the Republican position is,” veteran Sen. John Kerry, D-Mass., told CNN.

The posturing and rhetoric reflects the changed political equation in Washington in the aftermath of the November congressional elections described by President Barack Obama as a “shellacking” for Democrats, with Republican recapturing control of the House and narrowing the Democratic majority in the Senate.

Congressional Democrats have tried but failed to push through their preferred proposals in the lame-duck session, while they still have majorities in both chambers.

The House approved Obama’s proposal to extend the Bush tax cuts only for people earning up to $200,000 a year as individuals or $250,000 a year for families, with income above those levels increasing to levels from the 1990s. In the Senate, Republicans on Saturday successfully blocked debate on the proposal, as well as a similar one that the income threshold for higher tax rates at anything over $1 million.

Democrats contend the nation must prevent working-class Americans from facing higher taxes, as promised by Obama in his 2008 election campaign, but can’t afford the extra hundreds of billions of dollars it would cost to maintain the tax cuts for the wealthy. Republicans argue that the economy remains too fragile to allow anyone’s taxes to increase.

For now, compromise appears to include a temporary extension of the tax cuts enacted in 2001 and 2003, probably for a year or two, while Congress works on a long-term plan to reduce the nation’s debt.

“I’ve said that neither side has the votes to get what they want, so I think we’re going to have to kick it over for two years,” Republican Sen. Orrin Hatch of Utah told CNN’s “State of the Union” program, adding that the deal also will have to include extending unemployment benefits, as demanded by Democrats. “If you want to go beyond that then I think things break down.”

On the same program, Democratic Sen. Ron Wyden of Oregon called for a one-year extension of the tax cuts for everyone to buy time for Congress to work out a total tax overhaul. He said the key was to get a deal quickly and move forward.

“This is a town driven by a culture of procrastination,” Wyden said. “If you don’t force fast action, what you’ll end up doing is just kicking the can down the road, and the only thing those jobless Americans will be is a kicked can.”

Sen. Dick Durbin of Illinois, the chamber’s second ranking Democrat, told the CBS program “Face the Nation” that the tax cut and jobless benefits issues must be linked.

“The notion that we would give tax cuts to those making over $1 million a year, which is the Republican position, and then turn our backs on 2 million Americans who will lose unemployment benefits before Christmas, 127,000 in the state of Illinois, is unconscionable,” Durbin said.

On the same program, Republican Sen. Jon Kyl acknowledged that an agreement would include both the extended tax cuts and the unemployment benefits.

“There are other items that both the president and Republicans would like to see a part of this package as well,” Kyl said. “As one of the six negotiators, I can tell you there have been a lot of discussions about a lot of the other elements as well. But at least in theory I think an agreement could be reached in the relatively near future.”

Asked if Congress could break at the end of the year without acting on the measures, requiring a restart of the process when the new Congress convenes in early January, Hatch told CNN: “I don’t think we can. I think that would be disastrous.”

Kyl echoed that on CBS, saying: “It’s almost Christmas Eve. I don’t think anybody thinks that we can leave this thing hanging.”

Or as Durbin put it: “There’s nothing that motivates members of Congress more than the thought of a recess or going home.”

The biggest challenge for Democrats may be getting their House caucus to accept a compromise, a senior Democratic aide told CNN on Sunday.

According to the source, House Democratic leaders met Saturday night with Vice President Joe Biden, White House Chief of Staff Pete Rouse, Treasury Secretary Timothy Geithner and White House budget chief Jack Lew to discuss the negotiations, while House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid visited the White House to meet with Obama.

“There’s going to be a deal,” the senior Democratic aide said on condition of not being identified by name, adding: “the folks who are going to have the toughest time agreeing to that are House Democrats.”

McConnell and the rest of the Senate Republican caucus have refused to consider any other issues until Congress acts on the tax-cut extension and spending authorization plans for the rest of the fiscal year.

That leaves little time for more proposals being pushed by Democrats, McConnell said on NBC. In particular, he questioned if the Senate would have time to take up a major defense authorization bill that includes the “don’t ask, don’t tell” repeal, and the New START treaty with Russia that resumes mutual inspections of nuclear arsenals and limits the number of warheads.

The START treaty has some GOP support, including former Secretaries of State George Schultz, Henry Kissinger and Colin Powell, as well as the ranking Republican on the Foreign Relations Committee, Sen. Richard Lugar of Indiana.

Lugar told CNN’s “State of the Union” that “the votes are there” to ratify the treaty now in the Senate, if it can be brought up for a vote. However, Kyl told reporters that “I don’t think we’re going to have time to do the treaty in the lame-duck session.”

On NBC, McConnell offered a limited view of possible compromises with Obama and Democratic leaders, saying: “To the extent that the president wants to do things that I and my members are comfortable with, we want to do that for the country.”

Kerry responded on NBC that the Republicans were using their filibuster power to hold Democratic proposals hostage.

“What we’ve seen is a Republican Party that’s absolutely prepared to deny unemployment insurance to people who have been laid off, who can’t pay their bills, who want to, you know, put food on the table for their families,” Kerry said. “They (Republicans) have said, “No, we’re willing to hold that hostage so we can give the wealthiest people in the country a bonus tax cut.”

He called such politics hypocritical, and said of McConnell: “All he talked about was if they could do something that makes (them) comfortable. That’s not how you compromise. They need to have a little discomfort, just as we have a little discomfort.”

— CNN’s Dana Bash, Steve Brusk and Gabriella Schwarz contributed to this story.