House Passes Middle-Class Tax Cut as Dems, GOP Try to Reach Compromise

House Democrats on Thursday passed a bill making middle-class tax cuts permanent as Republicans accused them of playing political games at a sensitive time.

The bill passed 234-188 but stands no chance in the Senate. But House Democrats, who want to let the cuts expire for the wealthy, wanted to publicly stake out their position before compromising on extending the tax cuts for everyone.

Republicans immediately cast the vote as a tax hike on small businesses and families earning over $250,000.

"During these difficult economic times, raising taxes on any American family or small business will not help our economy recover nor foster the private-sector job growth needed to achieve economic recovery," Rep. Gary Miller, R-Calif., said in a written statement. "The only thing that Democrats have accomplished by today's vote is yet more uncertainty for our nation's job creators."

House Republican Leader John Boehner described the Democratic maneuvering as "chicken crap." With a panel of administration officials and bipartisan members of Congress in the midst of negotiations to work out a deal averting the looming expiration of the Bush tax cuts, Boehner argued that Thursday's vote is not helpful.

"Instead of beating around the bush, the Congress ought to act today to stop all the tax hikes, to cut spending, because it would reduce the uncertainty that's affecting employers all across our country," he said. "And if the lame duck Congress is unable or unwilling to cut spending and stop all the coming tax hikes, the new majority in January will."

But House Majority Leader Steny Hoyer, D-Md., said the House vote wouldn't undermine bipartisan negotiations on the tax cuts, "nor is it intended to embarrass or to put Republicans in a difficult place."

The White House applauded the House vote but added that the bipartisan negotiations will continue.

"The talks are ongoing and productive, but any reports that we are near a deal in the tax cuts negotiations are inaccurate and premature," the White House said in a written statement.

But the White House declined to comment on Boehner's remarks.

President Obama smiled and asked a reporter how she was when asked whether Boehner's comments indicated the negotiations were breaking down.

"Great to see you," he said as he headed back to the White House from a briefing at the Blair House.

Vice President Biden told reporters as he headed back to the White House that he wasn't aware of Boehner's comments.

The U.S. Chamber of Commerce took a strong stance against the House Democratic measure, saying it "fails to prevent a massive tax increase on small businesses." It also issued a letter signed by more than 1,300 businesses and trade associations calling on Congress to adopt a "long-term extension" of all expiring tax provisions by the end of the year.

The White House held the door open Wednesday for a year-end compromise that would extend all the Bush-era tax cuts temporarily and the Senate's top Republican said the only question that remained was how long current rates should be allowed to continue before they expire.

Senate GOP leader Mitch McConnell said all Republicans and some Democrats oppose any plan that would allow tax rates for the wealthy to rise. He predicted the Senate would approve extending the 2001 and 2003 tax cuts for everyone.

"The only thing we're discussing now is just how long" to extend them, McConnell said Wednesday evening.

Officials said negotiations center on a one- to three-year extension of the current rates.

White House spokesman Robert Gibbs reiterated that President Obama's main goal is to prevent a middle-class tax increase. Obama's "other line in the sand" is that he won't support a permanent extension of tax cuts for the wealthy, Gibbs said on ABC's "Good Morning America."

Obama has specifically voiced his objection to a permanent extension "to the wealthiest Americans.

"Having said that, we agreed that there must be some sensible common ground," Obama said.

That leaves open the possibility of a temporary extension of all the tax cuts.

Later, Gibbs declined to say whether Obama would support extending all the tax cuts for up to three years, which would push the issue beyond the next presidential election, in 2012.

Sen. Bob Corker, R-Tenn., said, "At the end of the day, I've been saying for six months, we'll end up with a minimum of two years of tax policy."
Treasury Secretary Timothy Geithner and White House Budget Director Jacob Lew held two closed-door meetings Wednesday with a group of four lawmakers from both parties to negotiate a deal on tax cuts.

"We are still talking in somewhat general terms although we've asked the staff of the various committees to make sure that we have detailed information on certain issues," Rep. Chris Van Hollen, D-Md., said after the evening session.

Van Hollen said the talks have expanded to include other issues, including a package of business and individual tax cuts that expired at the end of 2009. The business tax cuts, including a popular research and development tax credit, have wide support in Congress, but lawmakers have been unable to agree on spending cuts or other tax increases to pay for them.

"We need to figure out where there's agreement between the House and the Senate on those packages, what would be in something if we decided to move forward," Van Hollen said.

More talks are scheduled for Thursday.

Obama and Democratic leaders in Congress want to extend the Bush era tax cuts 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.

Making tax cuts permanent for middle- and lower-income taxpayers would add a little more than $3 trillion to the national debt over the next decade. Making them permanent for high earners would require an additional $700 billion in federal borrowing, according to congressional estimates.

Obama said Wednesday he is confident Democrats and Republicans will be able to resolve their differences over tax cuts, though he said there would be some "lingering politics" that have to be dealt with.

Forty-two Senate Republicans signed a letter to Senate Majority Leader Harry Reid, D-Nev., saying they intend to block action on all Democratic-backed legislation until the Senate votes on extending the Bush tax cuts, as well as a budget bill needed to keep funding the government into next year.

The strategy would further doom already dismal prospects for Democratic attempts to end the Pentagon's practice of discharging openly gay members of the military service and give legal status to young illegal immigrants who join the military or attend college.

Republicans have little incentive to make major concessions in December, considering their power on Capitol Hill will greatly increase in January. Democrats still control both chambers until the end of the year, but they need Republican votes in the Senate to pass a tax bill.

The Associated Press contributed to this report.