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Congress confliction over looming tax date

12/07/2010
By:

Sarah Green

Staff Writer

This past Thursday, members of the House of Representatives voted to extend tax cuts for middle-class citizens that were originally instituted under George W. Bush’s administration. This legislation would continue the tax breaks for individuals earning less than $200,000 per year and couples earning less than $250,000 per year. Good news right? Well, don’t celebrate just yet.

Washington must act quickly concerning this tax legislation, which is set to expire on Dec. 31. However, as per usual, our congressmen can not seem to cooperate. Despite the fact that the House of Representatives has reached a decision, many claim that this is simply an example of political posturing. According to many Democrats, the Senate simply does not have enough votes to pass this bill.

Some people have stated that the Democratic proposal was never serious anyway. Rather, as the future Speaker of the House, John Boehner (R) said, it is “chicken crap.” The Democrats merely intended to use this opportunity to remind their voter base that Democrats are pro-middle class. “We are 23 months from the next election, and the political games have already started,” Boehner said.

While the Democrats – including President Obama – do want to extend the tax cuts for middle-class Americans, the Republicans are pushing hard to permanently extend the tax breaks for everyone. But allowing tax cuts to continue across the board would add $700 billion dollars to the national deficit.

Republicans present a valid argument, though. Ending the high-end tax cuts could be incredibly detrimental to small business owners. There is a possibility that raising anyone’s taxes, middle or upper class, would further upset the already precarious economic situation.

In an attempt to hasten negotiations, President Obama appointed a six-man panel to concentrate solely on this issue. Budget Director Jack Lew and Secretary of the Treasury Tim Geithner are working with two Republican Senators, Jon Kyl of Arizona and Dave Camp of Michigan and two Democratic Senators, Max Baucus of Montana and Chris Van Hollen of Maryland to resolve these differences.

Many have criticized Obama for this action, however. Adam Green, a representative of the Progressive Change Campaign Committee, calls this a betrayal of Obama’s campaign promise. Apparently, in Green’s mind creating a panel of politicians to discuss a possible resolution is the equivalent of admitting defeat.

The PCCC representative stated recently, “this White House incredibly chose to wave the white flag – signaling to Republicans that they will take any deal, no matter how bad, including borrowing billions to extend tax cuts for the richest Americans.” Green now intends to lead the Progressive Change Campaign Committee in pressuring Obama to “keep his promise.”

I do not believe that we should be so quick to criticize. Too often the blame is placed on the President alone – yet it is Congress that is unable to reach a consensus on this issue. The deadline to make a decision on these tax cuts – and many other issues – is fast approaching. Perhaps we should give Obama a little credit for once. Strong-arming the Republican senators would undoubtedly fail – especially when Democrats lack the leverage needed to force an end to high-end tax cuts.

In contrast, his decision to create an open dialogue between a handful of members is far more likely to be effective. Instead of childishly demanding that the Republicans agree, Obama and the Democrats have offered them an opportunity to be heard. These discussions may lead to a reasonable compromise.

And this possible compromise could be beneficial to many Americans. While negotiations may lead to a temporary extension of tax cuts to both middle and upper class taxpayers, if no action is taken and the legislation expires on Dec. 31, everyone’s taxes would increase. Instead, Democrats may be able to obtain some other advantage in the compromise. For example, the unemployment benefits legislation expired on Dec. 1. Democrats may be able to push for an extension of these benefits alongside the tax legislation.

Other issues on the table include tax rates on capital gains and dividends, set to rise next year, and estate taxes, which fell to zero last year when Congress failed to reach a consensus. On Jan 1, though, the estate tax will return to 55 percent without congressional action.

It is unclear what the final verdict will be on these issues, but let us all pray that Congress can reach some form of agreement. If they do not reconcile their differences, American citizens will feel the consequences. No American wants to find tax increases under the tree this holiday season

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