President Barack Obama claims it's still a "wrestling match," but with Senate Republicans in uniform opposition, his plan to raise taxes on wealthier people while preserving cuts for everyone else appears increasingly likely to founder before Election Day.
Both Republicans and Democrats are already using the looming expiration of Bush-era tax cuts as a defining battle in elections to determine control of Congress that are just seven weeks away.
Gridlock appears to be an increasingly likely result in the Senate. Republicans said they had the votes to block legislation to extend the middle-class tax relief if Democrats follow through on their plan to deny tax breaks for the wealthiest Americans. The issue is more likely to be decided in a postelection session.
Sen. Jon Kyl of Arizona, the GOP whip, said Monday that his party was united in opposing Obama's proposed tax hike on the wealthy.
"Just before the recess we had a meeting and we discussed this, and every Republican was absolutely supportive of the idea that there shouldn't be any increases in taxes," Kyl said.
Congressional analysts say renewing the tax cuts for everyone would cost the government $4 trillion over the next decade. With polls showing a broad public anger over spiraling federal deficits, Obama wants to exclude individuals earning over $200,000 and couples making over $250,000 — who account for $700 billion of that total. They represent about 3 percent of taxpayers, according to the Tax Policy Center, a Washington think tank.
"Only in Washington could someone propose a tax hike as an antidote to a recession," GOP leader Mitch McConnell of Kentucky said.
McConnell has said a bill extending the tax cuts for only low- and middle-income earners cannot pass the Senate, but he declined to reiterate that threat on Monday. Republicans control 41 seats, the minimum needed for a successful bill-killing filibuster, though McConnell spokesman Don Stewart declined to say whether all 41 Republicans would support a filibuster.
Some Democrats, like Sens. Kent Conrad of North Dakota, Jim Webb of Virginia and Ben Nelson of Nebraska, are siding with Republicans against raising taxes on anyone during a fragile economic recovery.
"I don't think it makes sense to raise any federal taxes during the uncertain economy we are struggling through," Sen. Joe Lieberman, a Connecticut independent who aligns with Democrats, said Monday. "The more money we leave in private hands, the quicker our economic recovery will be. And that means I will do everything I can to make sure Congress extends the so-called Bush tax cuts for another year."
At issue is a year-end deadline to renew a variety of tax cuts enacted in 2001 — when the federal government was running a surplus. They include lower rates, a $1,000 per-child tax credit, relief for married couples, and lower taxes on investments and large estates.
On Sunday, House GOP leader John Boehner said he would support renewing tax cuts for the middle class but not the wealthy if that was his only choice. Though Boehner was clear that he supports extending the full range of tax cuts, the White House jumped on his remarks as a possible change of heart.
Boehner has proposed a two-year extension of the Bush-era tax cuts, which would push the question into the 2012 presidential election. Obama has declined to say that he'd veto such a plan.
Democrats are worried that November elections could hand the GOP control of the House and perhaps the Senate. The White House and its Democratic allies hope to use the tax-cut fight to cast themselves as defenders of the middle class and Republicans as a party eager to revive the days of a still-unpopular former president, George W. Bush.
"We're going to take the next 50-some days to convince the public that's exactly what the Republicans would do — back to the Bush policies," said White House press secretary Robert Gibbs said on NBC's "Today" show.
"We could get (tax cuts) done this week, but we're still in this wrestling match with John Boehner and Mitch McConnell about the last 2 to 3 percent" of upper-income taxpayers, Obama said Monday during a backyard town hall in a Northern Virginia suburb.
Gibbs said the middle class should not be used as a political football by Republicans maneuvering to give tax cuts to wealthy taxpayers, who he said don't need the reductions. Republicans say paring taxes for the wealthy would encourage them and the businesses they operate to create jobs.
Republicans, for their part, say that it's not just the rich who would be hit by Obama's tax hike on upper-income people. Many small businesses — that earn about half of all small business income — would also face the tax hike.
"No American should face a tax increase in January ... not one," said Indiana Rep. Mike Pence, the No. 3 House Republican. "We will not compromise our economy to accommodate the class warfare rhetoric of this administration."