More Dems back tax breaks for the rich

By Jennifer Liberto, senior writer


WASHINGTON (CNNMoney.com) -- A wave of weak economic reports has prompted some Democrats to embrace a short-term extension of the Bush tax cuts -- even for the rich.

President Obama has been campaigning to extend the tax cuts for the middle class, while allowing the tax breaks for individuals who earn more than $200,000 a year and families who earn more than $250,000 to lapse

However, the Senate Democrats don't have the 60 votes needed to beat back a filibuster and pass Obama's tax plan, a Senate Democratic aide confirmed. Sen. Ben Nelson, D-Neb., Sen., Kent Conrad, D-N.D. and Sen. Joe Lieberman, a Connecticut Independent who caucuses with Democrats, have all recently said that raising taxes -- even for the rich -- doesn't make sense while the economy is faltering.

They all say they'd favor some kind of temporary extension of the Bush tax cuts -- for a year or possibly 18 months -- including for those in the top income bracket.

Friday topped off a week of economic bad news, including plunging home sales and a downward revision in the Gross Domestic Product numbers.

These reports are prompting more Democrats to call for all sorts of tax cuts, including those that benefit the wealthy.

Rep. Harry E. Mitchell, D-Ariz., said in a letter sent Friday to House Speaker Nancy Pelosi that he wants to make the Bush era tax cuts on capital gains and estate taxes permanent.

"With today's news that the nation's gross domestic product expanded at only a 1.6 percent annual rate for the second quarter, I once again urge you to allow a vote on the extension of key tax cuts that are about to expire," Mitchell wrote.

The Bush tax cuts are particularly controversial. Republicans passed the tax cuts back in 2001 and 2003 and they're set to expire at the end of this year.

Under the White House plan, the top two tax rates would revert to where they were in the late 1990s: The 35% rate would go to 39.6% and the 33% rate would go to 36%. The highest-income filers would also see their tax rates on capital gains and dividends go up.

Making tax cuts permanent just for families making less than $250,000 would cost estimated $2.2 trillion over 10 years. Extending tax cuts for everyone costs $3 trillion over 10 years.

Rep. Chris Van Hollen, D-Md., who runs the Democratic Congressional Campaign Committee, said Friday that House Democrats have secured votes needed to pass the Obama-proposed plan of limiting tax cuts for middle class families.

But, Van Hollen acknowledged that the onslaught of bad economic news has given some Democrats pause about allowing the tax cuts to expire for those in the top income bracket.

"Obviously you have a variation of opinion in the Democratic Caucus," Van Hollen said. "There are obviously different variations (of tax breaks) that are possible; but anything you do has got to get out of the Senate."

And that's why the House wants the Senate to go first on the Bush tax cuts. The House has spent the last two years watching the Senate struggle with stalemates over other high profile Obama policy priorities, including health care reform, Wall Street reform and small business lending assistance, all of which passed more easily and quickly in the House.

The Senate returns from recess the week of Sept. 13. But Senate leaders have been "discussing all options," because they lack the votes to pass the Obama plan on tax cuts as planned, Senate Democratic aides confirm.

Senate Budget Chairman Kent Conrad, D-N.D., a fierce deficit hawk, said last month that he would be reluctant to let anyone's tax cuts expire just yet.

"In a perfect world, I would not be cutting spending or raising taxes for the next 18 months to two years" Conrad said. "This downturn is still very much with us unfortunately."

- CNN Political Producer Peter Hamby and CNNMoney's Jeanne Sahadi contributed to this report. To top of page

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