WASHINGTON – Fresh off big victories on Election Day, Republicans in Congress feel empowered in their fight to extend tax cuts that expire in January, including those for the wealthy.

President Obama has said he wants to compromise with Republicans to ensure that tax cuts for middle-income families continue, suggesting he’s open to extending all the tax breaks for a year or two. Republican leaders say it’s a nice gesture by the president, but some key GOP lawmakers want more.

“It should be permanent,” said Sen. Judd Gregg, R-N.H. “We’ve got to get this economy to pick up and if you raise taxes you’re going to stifle the economy significantly. I’m sure that somebody’s explained that to the president.”

Rep. John Boehner of Ohio, who’s in line to be the next House speaker in January, also played down talk of a compromise.

“I think that extending all of the current tax rates and making them permanent will reduce the uncertainty in America and help small businesses to create jobs again,” Boehner said. “You can’t invest when you don’t know what the rules are.”

Democrats will have majorities in both the House and Senate when Congress returns this week for a lame-duck session that is expected to stretch into December. They will need Republican support to get the 60 votes necessary to pass a tax bill in the Senate.

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Obama and Democratic leaders in Congress want to make the tax cuts permanent for lower- and middle-income families, while letting them expire for individuals making more than $200,000 a year and married couples making more than $250,000. Republicans want to make the tax cuts permanent for everyone.

Many congressional aides, both Republican and Democrat, think lawmakers will settle on a temporary extension of all the tax rates, perhaps for a year or two. While some Democrats have supported the idea, interviews with lawmakers and aides from both parties suggest that compromise won’t be easy.

Republicans are itching for a tax fight. They believe voters punished Democrats for increasing the size of government, and are looking forward to next year when the GOP will control the House and have more seats in the Senate.

Democrats must balance the interests of liberals who are dead set against extending tax cuts for the wealthy — even for a short time — with the more conservative in their ranks who don’t want to raise taxes on anyone in a bad economy.

Clouding the issue is whether Democrats who lost at the polls will have the stomach for one last knockdown debate before they leave office.

An impasse would mean all the cuts could expire in January, at least temporarily, resulting in significant tax increases for families at every income level.

 


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