U.S. Senate Republicans firm on tax cuts for rich

* Bitter debate ahead of November congressional elections (Adds options to vote or delay, capital gains tax question)

WASHINGTON, Sept 13 (Reuters) - Republicans in the U.S. Senate poured cold water on Monday on hopes for a compromise with President Barack Obama that would have allowed Bush-era tax cuts for the wealthiest Americans to expire.

Taxes have become a flashpoint going into a Nov. 2 election in which Republicans are seeking to wrest control of Congress from the president's fellow Democrats. Obama says the cost of keeping the tax cuts for the rich is too high as the United States emerges from recession with a massive budget deficit.

The uncertainty over tax policy is hanging over the slow economic recovery and is keeping investors guessing about what will happen to taxes on capital gains and dividends.

Prospects faded for breaking the deadlock when Republicans gave a cool reception to a signal on Sunday by John Boehner, their party's leader in the House of Representatives, that he might be willing to bend. In a political gambit, Senate Republican Leader Mitch McConnell proposed a freeze on all tax brackets, insisting that cuts for wealthier Americans, as well as for the middle class, must be kept in place.

"I'm introducing legislation today that ensures that no one in this country will pay higher income taxes next year than they are right now," McConnell said on the Senate floor.

Republicans pledge to fight to preserve Bush-era tax cuts

Congressional Republicans said Monday that they will resist President Obama’s plan to allow Bush-era tax breaks for the nation’s wealthiest households to expire. They vowed to fight to preserve the cuts for all Americans.

Obama has argued for extending the tax breaks - which President George W. Bush approved in 2001 and 2003 and are set to expire this year - only to household incomes below $250,000 a year. But GOP leaders in the House and Senate said that any plan to raise taxes during an economic downturn would harm many small-business owners.

“Americans have had it. They’re tired of Democrat leaders in Washington pursuing the same government-driven programs that have done nothing but add to the debt and the burden of government. We can’t allow this administration to demand that small-business owners in this country pay for its own fiscal recklessness,” Senate Minority Leader Mitch McConnell (R-Ky.) said Monday in a speech on the Senate floor. “And that’s why I’m introducing legislation today that ensures that no one in this country will pay higher income taxes next year than they are right now.”

McConnell’s bill would permanently reduce the estate tax, as well as codify Bush-era reductions in income tax rates and the alternative-minimum tax - an addition that would push the total cost of the package to well more than $4 trillion by 2020.

House Minority Whip Eric Cantor (R-Va.) echoed that view, vowing in a statement to “do everything in my power to stop President Obama and Speaker Pelosi from raising taxes on working families, small-business people and investors.”

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/13/AR2010091303980_pf.html

Senate G.O.P. Digs In to Keep Tax Cuts

WASHINGTON — The Senate Republican leader proposed legislation on Monday to continue all of the Bush-era tax cuts indefinitely, testing the willingness of Democrats to allow a tax increase on the wealthiest Americans in a weak economy and making clear that a partisan fight will extend deep into the campaign season if not beyond.

The proposal by the Senate leader, Mitch McConnell of Kentucky, came a day after the House Republican leader, John A. Boehner of Ohio, suggested a potential compromise, saying he would vote for President Obama’s plan to extend the cuts only for households earning less than $250,000 if he had no other choice.

In part, Mr. McConnell’s proposal illustrated the greater leverage that Republicans enjoy in the Senate, where they control 41 seats — enough to filibuster and block any bill. While Mr. Boehner cannot stop House Democrats from forcing a vote on the president’s favored tax plan, Mr. McConnell made clear that he would have a say and that he wanted to put a handful of wavering Senate Democrats on the spot.

But Mr. McConnell’s position also served as a political counterweight to Mr. Boehner’s statement on Sunday, which suggested that some Republicans wanted to avoid a brawl in which they would be cast as blocking tax relief for the middle class to ensure that tax cuts continued for the wealthy. Senate Republicans, by contrast, seem to relish the fight.

http://www.nytimes.com/2010/09/14/us/politics/14cong.html

I hope McConnell's freeze is a permanent freeze.

Republicans have to stand up and explain that permanent low tax rates on "the rich" benefit the poor and everyone else. They've been running scared on this for decades, ever since "trickle down" became a pejorative.

First we had Bush Sr repudiate Reaganomics, then Newt and Kasich change the label from growth to phony "balanced budgets". Then we had Bush Jr. with pseudo-Keynesian "stimulus". Of course, Democrats love "balanced budgets" and "stimulus".

I'm sorry, if the economy is going to grow, some rich people will benefit. You can't run away from that. And Democrats will falsely label Republicans as friends of the greedy rich regardless of what they say or do.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.