(by Stephen Dinan, WashingtonTimes.com) – Republican senators said Wednesday they will block all business in the chamber until Democrats tackle the long-overdue spending bills and impending tax increases, …even as House Democrats prepared to push ahead with a partisan tax vote Thursday. 

House Majority Leader Steny H. Hoyer said the chamber will vote on a bill that would extend the 2001 and 2003 tax cuts for most Americans, but would mean a tax increase for those making more than $250,000.

That vote comes even as a high-level working group organized by President Obama and congressional leaders met to try to make a binding deal, and even as Senate Republicans said they won’t accept tax increases that could affect small businesses [those making more than $250,000].

“It says that every Republican will vote against proceeding to any legislative matter until we’ve funded the government and protected every taxpayer from a tax hike,” said Minority Leader Mitch McConnell, Kentucky Republican. “Basically, first things first.”

All 42 Senate Republicans – including Sen. Mark Steven Kirk of Illinois, who was sworn in Monday – signed a letter saying they will filibuster [delay] anything Democrats try to do “until the Senate has acted to fund the government and we have prevented the tax increase that is currently awaiting all American taxpayers.”

The move was meant to pressure Democrats, who are divided over how to handle the tax cuts and who had hoped to move on to issues more friendly to them, such as union-friendly legislation, a nuclear arms reduction treaty and a bill to legalize illegal immigrant students.

Senate Majority Leader Harry Reid, Nevada Democrat, said he will push ahead with those other bills anyway, noting that the Senate should work on other things while making progress on the spending and tax cut bills.

“I wish I could report we’re close to wrapping up action on these bills, but we’re not,” Mr. Reid said Wednesday after receiving the letter, which he said was meant as a tactic to give Republicans who might otherwise support his priorities a reason to vote against them.

On Tuesday, President Obama and congressional leaders agreed to form a six-person, high-level working group to try to hash out a final deal on tax cuts. They met twice Wednesday.

But congressional aides said the real decision-making will happen when Senate Democrats decide how much they will need to bend in order to pass a bill.

Republicans are unified in calling for the 2001 and 2003 tax cuts to be [permanently] extended in full, while Democrats are divided. [The majority] want to see the tax cuts for those making more than $250,000 expire, while [some] say raising taxes could damage the fragile economy further.

One compromise that Senate Democrats floated this week was to raise the income level of those whose tax cuts will be extended to $1 million, but Republicans contend that such an increase still will hurt some small businesses.

Even as Republicans professed unity on their two top priorities, some cracks were showing. Several Republicans said they also want to make sure unemployment benefits are extended for the long-term jobless.

Those benefits expired this week, and Republicans and Democrats have been sparring over an extension and how best to pay for it.

Copyright 2010 The Washington Times, LLC.  Reprinted from the Washington Times for educational purposes only.  Visit the website at washingtontimes.com.


NOTE ON THE TAX CUTS (from forbes.com/2010/07/22/expiring-bush-cuts-affect-personal-finance-taxes.html):

  • The tax cut in 2001 created six tax rate brackets–10%, 15%, 25%, 28%, 33% and 35%, based on income levels.
  • If an extension is NOT passed and signed into law, then the pre-2001 tax rates will go back into effect starting in tax year 2011.
  • The 10% bracket would disappear, and those taxpayers would move up to the 15% bracket, which would apply to all incomes below $34,550.
  • The other tax rates would increase to 28%, 31%, 36% and 39.6%
1. What have Republican senators said they will do until Democrats work on the spending bills and impending tax increases?

2. Instead of working on the tax increase bill until it is settled, what bills would Democratic senators prefer to work on?

3. a) What has Senate Majority Leader Harry Reid said he will do? Why does he say he will take this action?
b) Ask a parent if he/she agrees with Senator Reid’s decision, and to explain his/her answer.

4. How do Democrats and Republicans differ in their stance on extending the tax cuts?

5. The following is from a commentary on the tax cuts:

  • In 2001 and 2003 (almost 10 years ago and 8 years ago) the Congress approved a reduction in tax rates to spur the economy.
  • The deal was, the tax cuts would expire at the end of 2010 unless they were affirmatively extended.
  • The tax rates which are currently in place are the … tax rates which are currently in place.
  • Republicans have allowed [Democrats] to categorize the argument as “extending the Bush Era Tax Cuts.” That’s flat wrong.
  • What President Obama and most … Democrats in Congress want to do is to RAISE TAXES.
  • If all of the Bush Era Tax Cuts are extended, no one, not one single person of the more than 310 million in the United States will have their taxes cut. Their tax rates will remain the same.
  • If, on the other hand, Nancy Pelosi and her Liberal colleagues in the House want to change [current] rates, they will not be reversing a tax cut, they will be RAISING TAXES.  (found at studentnewsdaily.com/commentary/it-is-NOT-a-tax-cut)

a) What do you think of this explanation?
b) Do you think tax rates for any Americans should be raised? Explain your answer.
c) Do you think an increase in tax rates for “the rich” will negatively affect the middle and lower classes (jobs, etc.)?


Ten Myths About the Bush Tax Cuts-and the Facts

Myth #1: Tax revenues remain low.
Fact: Tax revenues are above the historical average, even after the tax cuts.

Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.
Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline.

Myth #3: Supply-side economics assumes that all tax cuts immediately pay for themselves.
Fact: It assumes replenishment of some but not necessarily all lost revenues.

Myth #4: Capital gains tax cuts do not pay for themselves.
Fact: Capital gains tax revenues doubled following the 2003 tax cut.

Myth #5: The Bush tax cuts are to blame for the projected long-term budget deficits.
Fact: Projections show that entitlement costs will dwarf the projected large revenue increases.

Myth #6: Raising tax rates is the best way to raise revenue.
Fact: Tax revenues correlate with economic growth, not tax rates.

Myth #7: Reversing the upper-income tax cuts would raise substantial revenues.
Fact: The low-income tax cuts reduced revenues the most.

Myth #8: Tax cuts help the economy by “putting money in people’s pockets.”
Fact: Pro-growth tax cuts support incentives for productive behavior.

Myth #9: The Bush tax cuts have not helped the economy.
Fact: The economy responded strongly to the 2003 tax cuts.

Myth #10: The Bush tax cuts were tilted toward the rich.
Fact: The rich are now shouldering even more of the income tax burden.

(Read detailed explanations of each fact at heritage.org/Research/Reports/2007/01/Ten-Myths-About-the-Bush-Tax-Cuts.)

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