Will Congress Heed Tax/Jobless Expiration Dates?

Sen. Jon Kyl, R-Ariz., and Sen. Richard Durbin, D-Ill., on "Face the Nation," Sunday, Dec. 5, 2010. CBS

Leading Republican and Democratic Senators expressed optimism this morning that an agreement could be ironed out that will resolve the impending expiration of current tax rates and unemployment benefits.

Republicans in the Senate have blocked efforts to extend unemployment benefits to Americans who will lose them this month. Democrats yesterday failed to pass either of two tax cut extension bills that would have excluded the wealthiest two percent of Americans.

Appearing on CBS' "Face the Nation" Senator Jon Kyl, R-Ariz., a lead Republican negotiator on the tax cut issue, took issue with calling the extension of the Bush-era tax cuts "tax cuts."

"Nobody is talking about tax cuts; we're talking about extending the rates that have been in existence for the last decade," he told host Bob Schieffer.

Kyl said that most believe the "recipe" for a compromise would include "at least an extension of unemployment benefits for those who are unemployed, and an extension of all of the tax rates for all Americans for some period of time."

Kyl said that "at least in theory" he believed an agreement could be reached in the relatively near future.

Sen. Dick Durbin, D-Ill., was optimistic about the Christmas Eve deadline. "There's nothing that motivates more than the thought of a recess or going home," he said.

Durbin, however, said that he was troubled: "I know in a few months we're going to have a debt ceiling vote - and all of these pious speeches, posing for holy pictures about our deficit. Many of the people who are going to vote for this tax cut for the wealthiest people in America adding to our deficit, lamenting that deficit, will refuse to vote on the debt ceiling out of principle. I think honestly the debt ceiling ought to be a part of this - unlikely, but it is part of the same conversation."

Schieffer asked Kyl about a CBS News poll this week which showed that most Americans are opposed to extending tax cuts for the wealthy.

Kyl countered with a recent Gallup poll that he said indicated "80% of Americans saying 'don't increase taxes.'"

[The Dec. 1 poll Kyl references and published in USA Today found that, cumulatively, approximately 83% said the Bush era tax cuts should be extended. However, the majority of those (43%) said there should be limits set according to income, of either $250,000, $500,000 or $1 million.

In another Gallup poll released a day earlier, more Americans felt reducing the deficit and the debt (39%) and raising taxes on the wealthy (31%) were better ways of dealing with the economy than cutting taxes (23%).]

"Why is it so important to Republicans to extend the tax cuts for the upper-income people?" Schieffer asked.

"Especially in an economic downturn like we're in now - but I would say at any time - it's not a good idea to raise people's taxes," Kyl replied. "The key here is to put people back to work, to get economic growth going again. We're never going to get out of the deficit that we have unless we have economic growth in this country. That will produce wealth, the government taxes that wealth - it's good for the country, it's good for the government.

"That means that we have to have jobs created," he continued. "Many of the jobs that are created are created by people who have money. About 25% of all the jobs in the country, for example, are created by small businesses. And those small businesses would have been dramatically impacted by an increase in their taxes."

[In an August 2010 article titled "Five Myths About the Bush Tax Cuts," the Washington Post reported that "Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets."]

Durbin said that without Republican support for extending unemployment benefits (which will run out for many Americans this month), extending tax cuts for the wealthy is "a non-starter."

"The notion that we would give tax cuts to those making over a million dollars a year, which is the Republican position, and then turn our backs on two million Americans who will lose unemployment benefits before Christmas - 127,000 in the state of Illinois - is unconscionable," Durbin said.

Durbin also said, having sat on the presidential commission studying how to reduce the deficit, that for Republicans "clearly the deficit is not an issue here any longer. If we can justify giving a tax break to the wealthiest people in America, adding $700 billion to our deficit over the next 10 years, I wonder what I've been doing over the last ten months sitting on that deficit commission."

"If you get the unemployment benefits," Schieffer said, "will you be willing to go along with extending these tax breaks for the upper- income people? Because it sounds like that that's what it's going to take."

"We're moving in that direction - against my judgment and my own particular view of things," Durbin said. "But it appears now the Republican position is - and it's been consistent, I'll say that, we saw it yesterday in the Senate - is we have to continue the Bush economic policies. And the Bush economic policies of tax cuts for the wealthiest individuals have led us into this recession, cost us 15 million jobs, have utter failed. You can't point to those policies as successful."

Durbin did say that he will not vote for permanent tax cuts for the wealthy. "I don't speak for anyone else but when it comes to the president's position and the position of Democrats in Congress, we are laser-focused on this jobs issue," he said.

When asked if he would consider temporary extensions of tax cuts, Kyl repeated, "First of all, we're not talking about tax cuts. We're talking about extending for another period of time the rates that have been in existence for the last decade.

"Secondly, those tax rates helped our economy and job production. They did not create the problem that we have today. That was a problem created, as you know, by the crash of Fannie Mae and Freddie Mac and the housing market, the so- called bubble. It had nothing to do with these tax rates."

Kyl said, had the Bush tax levels not been in place since 2001, "the situation would have been much worse. That's why they need to be extended for some period of time."
  • David Morgan

    David Morgan is a senior editor at CBSNews.com and cbssundaymorning.com.

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