Facing stiff resistance from politically vulnerable lawmakers in their own party, Democratic leaders have begun to signal that they might have little choice but to extend the Bush-era tax cuts to top income earners, at least until after the election.
House Speaker Nancy Pelosi, D-Calif., became the third House leader in recent days to suggest Democrats will have to compromise on the tax cuts, rather than extend them only to those earning below $200,000 and couples earning less than $250,000. She told reporters Thursday that she believes she will find "common ground" with approximately 40 House Democrats who want the tax cuts to be extended to all income earners.
Many in this group sent a letter to Pelosi urging her not to raise anyone's taxes.
"We believe in times of economic recovery it makes good sense to maintain things as they are in the short term, to provide families and businesses the certainty required to plan and make sound budget decisions," the letter said. "Providing this certainty will give small businesses, the backbone of our economic recovery, confidence and stability,"
The list of 31 Democrats who signed the letter include many who are facing tough re-election bids, such as freshman Glenn Nye, of Virginia and Frank Kratovil, of Maryland. With just a few weeks before lawmakers face voters, Pelosi may not be able to pass a tax cut bill that excludes upper income earners before Congress adjourns in early October.
Pelosi would not provide a timetable for when the tax cuts would be considered. It remains a strong possibility that the issue will be pushed beyond the November election, to a "lame-duck" session.
If Pelosi acts sooner and puts a bill on the House floor that extends the tax cuts only for lower income earners, she risks Republicans amending it with a measure that would extend it for everyone.
One House Democrat who opposes raising taxes on higher income earners said this scenario poses a "dilemma" for the Democratic leadership because if Republicans tack on such a provision, "60 of us" will vote for it, and it will pass.
"There are a substantial number" of Democrats who want all the cuts extended, the lawmaker said, beyond the 31 members who signed the letter.
Pelosi is personally opposed to prolonging the tax cuts to upper income earners, a move she said will not benefit the economy and will instead add to the nation's ballooning deficit. She told reporters Thursday she sees "no justification" for extending them "for the wealthy," but she made no promises that upper income earners will be excluded from such a bill.
"The only thing I can tell you is the tax cuts for the middle class will be extended this Congress," Pelosi told reporters.
Earlier this week, House Majority Leader Steny Hoyer, D-Md., told reporters he is "prepared to discuss alternatives," to raising taxes on upper income earners, "so we can move forward," on a bill, though he later said this meant he was only willing to talk about other ideas, not necessarily agree to them.
Rep. Chris Van Hollen, D-Md., who heads the Democratic campaign arm in the House, said Democrats would have to consider a compromise that would extend the cuts for higher earners for one year.