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September 22, 2014

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House to vote on Bush tax cuts for middle class

The House votes today on a bill that would extend the Bush tax cuts, but only for the middle class.

The vote comes as congressional leaders are sitting with Obama’s topmost financial advisers to draft a compromise that most in Washington accept will have to incorporate some sort of a compromise between Democrats’ preferred proposal — tax cuts for the middle class only — and the Republicans’ demand for a extension of current tax levels in perpetuity.

If it passes, that’s not necessarily it for tax cuts, even though Democratic leaders want to see the bucks stop at the $250,000 ceiling.

It’s becoming more and more likely that if unemployment benefits are going to be extended, it’s going to have to come as a packaged deal with tax cuts for the wealthy. That means at least a temporary extension of the Bush tax cuts at income levels over $250,000, which lawmakers could try to move as a separate bill.

While the Congressional Budget Office has not scored such a bill, it’s likely to be a costly measure.

In the last few days, some Democratic leaders proposed “paying” for an extension of tiered unemployment benefits, expected to cost $56.4 billion over the next year, with the revenue saved from tax cuts that aren’t extended.

But while that sort of budgeting may be fiscally viable, politically, it’s dead in the water.

Republicans have held fast to the premise that keeping taxes from rising, on anybody, is an essential guarantee to make if the country is to recover from recession.

Several Democrats are on board with that philosophy — though with caveats.

Nevada Rep. Shelley Berkley has said that she would support a one or two year extension of the full tax cuts regime.

Today, she plans to vote for the middle-class only extension: “I don’t have the luxury making a political statement that’s going to hurt the people I represent," she said, although she said she would also support a temporary extension of cuts at higher levels.

But not before an extension of unemployment insurance is addressed.

“I would like to do that before I give people in my income bracket a tax cut that they don’t need,” Berkley said. “I’m very adamantly opposed to horse-trading, but that’s exactly what’s going to happen.”

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