WASHINGTON – Senate Democrats are considering abandoning plans for a pre-election showdown with Republicans over expiring tax breaks for the wealthy, saying a lack of consensus within the party and a desire to focus on job creation may delay a vote until after the November elections.

Instead of spending their time tussling over income tax rates, some Senate Democrats are pressing their leaders to stage a debate over companies that ship jobs overseas, an issue that proved politically potent in a Pennsylvania special election this year. With unemployment at 9.6 percent, these Democrats say a measure to create jobs would speak more directly to the concerns of voters anxious about the economy.

In response, Senate Majority Leader Harry Reid, D-Nev., and other key Democrats this week unveiled a bill that would offer businesses a two-year payroll tax holiday on jobs repatriated from abroad. The measure also would end subsidies for certain manufacturing companies that do business overseas or close U.S. plants and move them offshore.

“It is resonant,” said Sen. Byron Dorgan, D-N.D., one of the bill’s sponsors. “Somewhere around 20 million people woke up without work today. We’re trying to find a way to put an end to the incentives to move jobs overseas.”

Reid spokesman Jim Manley confirmed that Reid has set the procedural wheels in motion for debate on the bill and hopes to bring it to a vote before the Senate leaves town, perhaps as soon as next week. That would leave little time for the Senate to approve a must-pass budget resolution and do battle with Republicans over tax cuts enacted during the Bush administration.

Senate Democrats are scheduled to meet today to make a final decision on whether to vote on extending the Bush tax cuts. Republicans want to extend all the cuts, at a cost of nearly $4 trillion over the next decade. President Barack Obama has proposed extending the cuts only for households with incomes less than $250,000 a year, a move that would cost about $3 trillion over the next decade.

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Sen. Max Baucus, D-Mont., the Finance Committee chairman, is preparing a smaller bill that would cost nearly $2 trillion over the next decade. Aides said that measure would permanently extend cuts that benefit the middle class but would protect taxpayers from an expensive parallel tax structure, known as the alternative minimum tax, only through 2011, reducing the cost to the government.

Democratic leaders had hailed the battle over the upper-income cuts as an electoral winner for them, saying it would force Republicans to defend big tax breaks for about 3 million extremely wealthy households, many of them headed by millionaires. They said it would also expose GOP hypocrisy on budget deficits at a time when Republicans were blaming Democrats for driving up the national debt.

House Democratic leaders still hold that view, and Speaker Nancy Pelosi, D-Calif., may yet stage a vote in the House before the election, aides said, despite complaints from more than three dozen conservative Democrats who are fearful of raising taxes, even on the wealthy, in an election year.

But many Senate Democrats have come to see the tax battle as less important politically. clearly outlining the Democratic position, aides said, Obama has taken some of the sting out of Republican claims that Democrats are plotting to let all the tax cuts expire, causing taxes to rise next year for virtually every American.

“the president being out there and individual members talking at home, it’s clear where the lines are drawn in this debate, and you don’t need the vote to cement that,” a Democratic aide said, speaking on condition of anonymity to discuss internal deliberations.

Delaying the vote would also paper over divisions in the party rank and file. Although liberals are determined to let the tax cuts expire for the wealthy — Sen. Jay Rockefeller, D-W.Va., called it a “moral issue” — many conservatives are pushing to extend all the cuts.

 


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