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WASHINGTON -- A deal to extend expiring tax cuts for all taxpayers is starting to take shape even as Senate Democrats plan weekend votes on bills that would let the tax cuts for the wealthy die.
The Obama administration is seeking to expand the tax package to include other measures designed to boost the nation's sluggish economy. Among them are extending jobless benefits for millions of unemployed workers and continuing tax breaks that were part of President Barack Obama's massive economic recovery package enacted last year.
Without action by Congress, unemployment benefits will run out this month for 2 million people, and several million more will lose them later in the winter.
Earlier Democratic efforts to extend the program into 2011 have been blocked by Republicans demanding offsetting spending cuts. The issue is Obama's top domestic priority, and shows how difficult a time his administration will have working with newly empowered Republicans, who will control the House of Representatives next year.
In addition, Democrats are seeking to extend Obama's Making Work Pay tax credit, which provides tax credits of up to $400 for individuals and $800 for married couples. The tax credit was enacted last year and expires in January.
Democrats also want to extend two other measures: a tuition tax break for college students and a cut for businesses that hire the unemployed.
Sweeping income tax cuts enacted under former President George W. Bush are to expire at the end of the year. If Congress does not act, taxpayers at every income level would be hit with a significant tax increase.
Obama and Democratic leaders in Congress want to extend the tax cuts only for individuals making less than $200,000 and married couples making less than $250,000.
Republicans and some rank-and-file Democrats want to extend the tax cuts for everyone.
Senate Democrats, however, want to publicly stake out their position before agreeing to any compromise, much like their counterparts in the House did Thursday.
The House passed a bill Thursday that would extend middle class tax cuts while letting tax cuts for the wealthy expire. Democratic Sen. Max Baucus introduced a similar bill in the Senate Thursday evening.
Senate Majority Leader Harry Reid scheduled votes on Saturday on two Democratic proposals: one by Baucus and another by Sen. Chuck Schumer. Baucus' bill would extend tax cuts for individuals making less than $200,000 and married couples making less than $250,000. Schumer's bill would extend tax cuts for families making less than $1 million.
Neither bill is expected to pass the Senate because Democrats need Republican support to pass a tax bill.
Senate leaders from both parties negotiated Thursday evening on a plan that would have allowed votes Friday on Democratic and Republican proposals. Those talks, however, broke down. Without unanimous consent from all senators, Reid was unable to schedule the votes before Saturday.