House Democrats deeply divided over Obama plan that would let taxes on wealthy go back up

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House Dems deeply divided over Obama tax plan

WASHINGTON — Congressional Democrats are confronting deep divisions within their nervous ranks over whether to support President Barack Obama’s plan to raise taxes on the wealthiest Americans — or just punt the entire matter until after voters go to the polls Nov. 2.

Democratic leaders committed to Obama’s proposal were hearing Wednesday from endangered lawmakers who fear that raising taxes on anyone in a weak economy could be politically lethal.

“Don’t raise taxes in a recession,” said Rep. Earl Pomeroy, D-N.D.

House Majority Leader Steny Hoyer said Wednesday he was open to discussing alternatives to break the logjam, but he made it clear he supports the president’s plan.

“I’m always, as you know, prepared to discuss alternatives so that we can move forward,” said Hoyer, a Maryland Democrat.

The most sweeping tax cuts in a generation are due to expire at the end of the year, affecting taxpayers at every income level if Congress does not extend them. Obama wants to make the tax cuts permanent for individuals making less than $200,000 and married couples making less than $250,000.

Republicans and a growing number of Democrats want to extend all the tax cuts, at least temporarily.

House Democrats gathered together Tuesday night to discuss a poll showing that extending tax cuts for middle-income earners was a winning strategy for the party.

House Speaker Nancy Pelosi made the case that Obama’s plan was “good policy and good politics,” her spokesman said.

Not everyone was convinced. A group of moderate and conservative House Democrats was collecting signatures on a letter calling for Democratic leaders to offer a bill extending tax cuts for all Americans.

“We are in listening mode,” said Rep. Chris Van Hollen of Maryland, who heads the House Democrats’ campaign committee.

A fuller discussion was expected at the House Democrats’ weekly meeting Wednesday, but it was canceled.

This was not the debate Democrats wanted as the midterm election season opened. The plan was to make an extension of the middle-class tax cuts the party’s closing argument — against Republicans, not each other — as voters began to focus on whether they trust Democrats to improve the ailing economy enough to reward them with control of Congress for another two years.

Instead, Democrats who already have cast tough votes on bills overhauling the nation’s health care and financial regulatory systems are questioning the wisdom of debating a pocketbook issue just when voters are starting to pay attention to the election.

All 435 seats in the House, 37 in the Senate and the Democratic majorities in both are on the line.

The rift among Democrats contrasts with strong unity among Republicans in supporting a full renewal of all tax cuts, regardless of income, despite a 10-year cost to the government of about $700 billion above Obama’s plan. Still, House Republican leader John Boehner said over the weekend he would vote to extend the relief only for middle-income Americans if that were the only option available.

Some House Democrats, particularly moderates facing difficult re-election battles in districts carried by GOP presidential nominee John McCain two years ago, agree with a proposal offered by Republicans for a short-term renewal of all of the Bush-era tax cuts.

“We look forward to working with you to extend all income tax rates,” a small group of conservative-to-moderate House Democrats wrote in a draft letter to party leaders as lawmakers trickled back into town Tuesday from their summer break.

Democratic Reps. Jim Matheson of Utah, Melissa Bean of Illinois and Glenn Nye of Virginia were circulating the letter for more signatures and were picking up support.

On the Senate side, Sen. Dick Durbin of Illinois said most Democrats support Obama’s plan to allow income tax rates on family income exceeding $250,000 to rise to as high as 39.6 percent. But he also said some want to raise the amount of income exempted from the higher rates above the $250,000 figure called for by Obama — while not advocating a full renewal for, say, millionaires.

“Some people think it should go beyond $250,000, but how much and for what period of time is still being debated,” Durbin told reporters Tuesday.

The cost of extending the tax cuts for everyone for the next 10 years would approach $4 trillion, according to congressional estimates. Eliminating the breaks for the top earners would reduce that bill by about $700 billion. A one-year extension of the lower rates for high-income earners would cost the government $39 billion.

Associated Press writer Andrew Taylor contributed to this report.