November 11th, 2010
07:49 PM ET
12 years ago

Sources: Compromise could temporarily extend all Bush tax cuts

Washington (CNN) - An emerging tax cut compromise could be to temporarily extend Bush-era tax cuts for all income levels, congressional sources in both parties told CNN Thursday.

Republican and Democratic sources say in this scenario - a short term extension across the board - both sides would be giving ground.

Democrats would compromise on their pledge to let tax cuts for the wealthy expire, and Republicans would give on their promise to make all tax cuts, including those for the wealthiest Americans, permanent.

On its face, the idea appears nonsensical, since Democrats and Republicans agree on permanently extending middle class tax cuts - for those making $250,000 or less.

But GOP sources in particular say keeping tax cuts for the middle class and the wealthier Americans linked may be in their best interest.

They say an idea that had been floating - to "decouple" - is untenable. Under that scenario, middle class tax cuts would be made permanent and tax cuts for wealthy Americans would be extended temporarily.

These GOP sources say that would put them at a political disadvantage in that it would make the discussion all about tax cuts for the wealthy. The sources also say tax cuts for the wealthy would be harder to extend in the future without being linked to middle class tax cuts.

These sources in both parties emphasize that talks have not yet begun in earnest, but the idea would be to extend all tax cuts at least for two years, through the next presidential election, and, they hope, until the economy gets better.

Meanwhile, if the two sides remain deadlocked, some Republican sources say it could be to their advantage to let the cuts expire at the end of the year - for what could be a few weeks - and then take the issue up when the new Congress convenes in January, when GOP lawmakers have more power.

It does seem clear that Democrats know they have a lot more leverage now, and it behooves them to try to cut a deal before the end of the year.

However, the question both Republican and Democratic sources are asking is whether liberal and moderate Democrats who were already divided on the tax cut issue can come together and agree among themselves now, never mind in negotiations with Republicans.

Filed under: Congress • Taxes
soundoff (54 Responses)
  1. Marie MD

    Rachel on MSNBC had a chart of what these "tax cuts" means for the middle class vs the rich. Think of the bottom portion of a snowman . . . . . nice and big and comfy for the rich. Now think of coal eyes for the snowman . . . . . that's the rest 99% of the population!

    November 12, 2010 07:14 am at 7:14 am |
  2. rdepontb

    Raise the limit to $1M if you must, but that's as high as you go. Accept all or most of the "Debt Panels" recommendation. We must make a two-pronged (at least) attack on the deficit; much better on the system to bite the bullet now rather than later. The longer we wait, the fewer options we will have, and if we wait as long as everyone wants we will have no choice at atll. We will all be learning foreign languages and cultures for a change.

    As for "bring back manufacturing to the USA" challenges: We do build cars-Hyundai, Honda, Toyota, Nissan...and Ford, GM, Chrysler. Boeing. Caterpillar. Bridge and building steelworks. Furniture. We do want to increase manufacturing jobs, and the supporting technology, supply,and distributing communities that go along with then, of course. But we have models in place right here. It is not always necessary to move jobs overseas (e.g., iPod, iPad, iPhone, Kindle, televisions...). We can have those same roboticized plants here, and convert the appropriate processes from manual to machine.

    As long as we do it now. So let's get our friends and legislators on board. Let them know we want this country to thrive.

    November 12, 2010 07:17 am at 7:17 am |
  3. Steven P

    Flat tax. Either the same dollar amount (ha!) or the same percentage. EVERYONE should pay income tax. Every single one of us.....or none of us.

    November 12, 2010 07:38 am at 7:38 am |
  4. bmullan

    I know the people are hurting from the economy but the economy is paying a price for bad decisions.

    Paying one's debts and one's way in life is something I think we are all taught as kids by our parents.

    This Country (all of us ! ) have NOT been doing that for the past 50 years.

    Let the tax cuts expire
    Let us ALL take our medicine and fix the U.S.A.

    It may take 10 years but our Country and our Kids and Grand-kids will be forever thankful to us for having done THE RIGHT THING.

    November 12, 2010 07:51 am at 7:51 am |
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