–President Obama Ignites Hill Sparring Over Fate of Bush Tax Cuts
–Congressional GOP Pushes 1-Year Extension Of All Bush Era Tax Cuts
–Budget Group Urges Congress To Craft ‘Comprehensive’ Deficit Cut Plan

By John Shaw

WASHINGTON (MNI) – President Barack Obama’s call for Congress to
renew only those Bush-era tax cuts for families making $250,000 or less
triggered a week of furious tactical skirmishing on Capitol Hill as
Democrats and Republicans frantically searched for the political high
ground to attack the other party.

None of the maneuvering appeared designed to actually find a
bipartisan plan to pass any version of the tax cuts anytime soon.

Obama began the week Monday urging Congress to extend Bush-era tax
cuts but exclude the wealthy.

“I’m not proposing anything radical here,” Obama said from the
White House. “I just believe that anybody making over $250,000 a year
should go back to the income tax rates we were paying under Bill
Clinton, back when our economy created nearly 23 million new jobs, the
biggest budget surplus in history and plenty of millionaires.”

Congressional Republicans immediately pounced on Obama’s plan,
charging that the President’s policy would increase taxes on small
businesses and hamper job growth.

House Majority Leader Eric Cantor scorched Obama’s tax plan and
repeated the House will vote during the last week of July on a one-year
extension of all Bush era tax cuts.

“On the heels of another devastating jobs report, President Obama
has doubled down on bad policy by calling for tax hikes on working
families and small businesses,” Cantor said.

House Ways and Means Committee Chair Dave Camp said Obama’s plan
would increase taxes on small businesses and other job creators and
would “further weaken an already fragile economy.”

Camp said a one0year extension would “create a path for tax reform”
next year.

The fate of the Bush-era tax cuts is one of the key elements
related to the so-called fiscal cliff.

The fiscal cliff refers to the convergence of three coming fiscal
events: across-the-board spending cuts scheduled to begin in January;
expiration of Bush-era tax cuts at the end of the year; and the need to
increase the statutory debt ceiling at the end of this year or early
next year.

Most congressional Democrats support Obama’s tax plan, but some
said the threshold for extending tax cuts should be $1 million rather
than $250,000.

Throughout the week, there was relentless tactical maneuvering in
the Senate over the fate of the tax cuts.

The Senate was technically debating a bill that would allow
businesses to deduct the full cost of equipment purchased this year and
to extend to firms a credit of up to $500,000 to offset 10% of the
amount they spend to expand their payroll in 2012 compared to last year.

Senate Majority Leader Harry Reid said the bill would give small
businesses “some kind of shot in the arm that they need very badly.”

Senate Minority Leader Mitch McConnell did not attack the small
business tax bill on substantive grounds but said it should serve as a
vehicle for a wide ranging debate on tax policy with votes on both the
president’s and the GOP’s tax cut plans.

McConnell appeared to catch Reid off balance by suggesting
immediate Senate votes on both Obama’s tax plan and the Republican plan.

Reid initially objected to McConnell’s motion, saying it was
critical to first pass the small business tax bill before shifting to
the larger debate on the Bush era tax cuts.

But then Reid modified McConnell’s request so the two plans would
need only a simple majority vote to pass the Senate. However, McConnell
rejected this proposal.

House Speaker John Boehner said Thursday the House will vote at the
end of this month to extend the Bush era tax cuts for a year and taunted
Democrats to offer an extension that would apply to only those making
$250,000 or less.

Boehner said a one-year extension of the Bush era tax cuts is an
“appropriate course of action” and would “stop the largest tax increase
in American history.”

As Democrats and Republicans skirmish over tax policy, the
Committee for a Responsible Federal Budget, a budget watchdog group, has
urged policymakers to get to work on the central fiscal challenge facing
the United States: crafting a “comprehensive” deficit reduction plan.

“Given the country’s current fiscal path, policymakers should avoid
extending any policies without either paying for them over a reasonable
timeframe or accompanying the extension with a plan to put the debt as a
share of the economy on a clear downward path,” the group said in a
statement.

** MNI Washington Bureau: (202) 371-2121 **

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