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November 30, 2010

Bipartisanship Tested in US Tax Debate

One day after President Barack Obama urged bipartisanship to solve America's most pressing problems, Republican and Democratic senators continue to stake out resolutely partisan positions on federal taxes and how best to stimulate the economy while shrinking the massive U.S. deficit.  At stake is what, if anything, can be accomplished in a brief, end-of year congressional session.

Next year, Republicans will take control of the House of Representatives and boost their numbers in the Senate.  With divided government looming, President Obama met with congressional leaders of both parties Tuesday to try to chart a course for swift legislative action in coming weeks.

"I thought it was a productive meeting," he said. "I thought that people came to it with a spirit of trying to work together, and I think it is a good start as we move forward. I think everybody understands that the American people want us to focus on their jobs, not ours."

Republican leaders echoed the sentiment, and embraced a proposal from the president that congressional representatives of both parties meet with administration officials to craft a bipartisan deal on federal taxes and government spending.

But soon thereafter, partisan sniping engulfed the halls of Congress.  With stubbornly-high U.S. unemployment, federal income taxes set to rise, and runaway national debt, Tennessee Republican Senator Lamar Alexander accused Democrats of pursuing a misguided agenda that voters rejected in last month's elections.

"In bringing up so many issues in this lame duck [end-of-year] session, the Democratic Senate leadership is insisting on an encore for a concert that drew a lot of boos [from the American people]," he said.

Democrats want to extend tax cuts for all but top income-earners and extend federal unemployment benefits.  In addition, President Obama has urged the Senate to ratify a nuclear arms control treaty with Russia.  Some Democrats are also pushing for a repeal of the U.S. military's ban on openly-gay service, and a provision allowing illegal-alien youth to remain in the United States if they excel at school and perform military service.

Republicans say they have only one immediate priority: the economy.

"First, we ought to resolve what the tax rates are going to be for the American people beginning next year," said  Senate Minority Leader Mitch McConnell.

Republicans insist that all tax cuts be extended for all income levels, including millionaires, and have threatened to block any legislation that allows taxes on top earners to rise.  They say allowing any taxes hikes would depress an already-weak U.S. economy.  Democrats say preserving tax cuts for the wealthy would add $700 billion to the national debt over the next 10 years.

Democratic Senator Byron Dorgan of North Dakota says the Republican position is fiscal suicide.

"We [the United States] are at war," said Dorgan. "We have paid for none of it.  It has all been added to the debt.  And we are talking about cutting taxes for people that make a million dollars a year.  It is Byzantine.  Historians will look back and say, 'What were they possibly thinking?'"

Democratic Senator Claire McCaskill of Missouri echoed the sentiment.

"Really?  The Republicans would block tax relief for 99.9 percent of Americans just to protect millionaires who have done very well in this down economy?" she asks.

Among the compromises reportedly under consideration would be a temporary tax cut extension for all income levels tied to an extension of unemployment benefits and other items sought by Democrats.  Alternatively, some Democrats have proposed setting the cut-off for a tax reduction at the one-million-dollar income level.

With legislators of both parties holding firm to their positions, the question becomes whether leaders can strike a bipartisan compromise and convince their members to support it.  Until then, the stand-off continues, with each side looking to see if the other will blink.