Senate Democratic leaders decided Thursday to delay a vote on preserving soon-to-expire middle class tax cuts until after congressional elections in November.
President Obama has made the tax cuts a priority. But Senate Majority Leader Harry Reid decided to delay any vote after a meeting with other Senate Democrats failed to produce a consensus on how to proceed.
"Democrats believe we must permanently extend tax cuts for the middle-class before they expire at the end of the year, and we will," Reid spokesman Jim Manley said. "Unfortunately, to this point we have received no cooperation from Republicans to do so."
Enacted in 2001 and 2003 under President George W. Bush, they were the most sweeping tax cuts in a generation. If Congress takes no action, taxpayers at every income level face significant tax increases next year.
Republicans want to extend all the tax cuts. Obama and Democratic leaders in Congress want to extend them for individuals making more than $200,000 and married couples making more than $250,000.
"We will come back in November and stay in session as long as it takes to get this done," Manley said.
A last-minute, or lame duck, session of the House and Senate is set to begin Nov. 15 with a few new faces and perhaps a far different political outlook after an election in which Republicans are expected to make significant gains, even possibly enough to gain control of the House or Senate, or both. Democrats still will hold the majority through the end of the year, however. Some House and Senate Democratic officials believe the timing would make it easier to extend the Bush-era tax cuts set to expire in January.
But who gets a break on their tax bill -- everyone, or just what Obama calls the middle class -- still would likely be the subject of heated debate.
The Senate's No. 2 Democrat, Dick Durbin of Illinois, described an election-driven stalemate unlikely to lift in the next five weeks, when many lawmakers up for re-election would prefer to be home campaigning. All 435 seats in the House and 37 in the Senate are on the line.
"We are so tightly wound up in this campaign that it's impossible to see a bipartisan answer to the challenge we face," Durbin, the Democrats' vote-counting whip, said. "That's the reality before the election."
Pre-election, some Democrats are wary of supporting Obama's plan to let taxes rise for the wealthiest Americans, fearing they would be accused of supporting a tax hike. Other Democrats believe they have a winning message of fiscal responsibility while making the rich pay more after years of relative prosperity.
"I'm doing all I can to get the middle income tax cut passed as quickly as possible," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.
GOP lawmakers say it's a familiar debate: Democrats favor tax increases while Republicans oppose them.
Sen. John Cornyn, R-Texas, said Democrats are putting nearly every working American at risk for a significant tax increase next year.
"They are in charge and they haven't done anything about it," said Cornyn, who is chairman of the committee in charge of electing Senate Republicans. "That would not be a position I would want to be in."
Delaying action on the tax cuts could cause problems for the Internal Revenue Service and employers trying to withhold the correct amount of taxes from workers' paychecks, starting in January. The Treasury Department, which oversees the IRS, usually makes withholding tables available in mid-November for the following year, so employers and payroll firms have time to prepare.
"If Congress has not acted to extend the middle class tax cuts by that time, Treasury will then make an appropriate determination about how to proceed," Treasury spokeswoman Sandra Salstrom said.
Democrats say Republicans are holding middle class tax cuts hostage while they fight to extend tax cuts for the wealthy, an argument that would be stronger if Democrats actually scheduled a vote on the proposals. Senate GOP leaders have vowed to oppose legislation that would extend only middle-class tax relief. Democrats would need at least one Republican vote to overcome a filibuster.
"The president would sign a bill tomorrow that would extend the tax cuts for the middle class to avoid saddling them with a crippling tax hike," said White House spokeswoman Amy Brundage. "Unfortunately, Republicans in Congress have made it clear they would rather stall and obstruct instead of giving working families the assistance they need."
House Democrats said they were waiting for the Senate to act. Some said they have been frustrated by passing bills that languish in the Senate.
"The Senate could always surprise us, but not on the tax extenders. That will be done in the lame duck," said Rep. Alcee Hastings, D-Fla.