Negotiators work on tax deal as House passes bill

WASHINGTON (AP) - The House passed a bill Thursday to extend middle class tax cuts while letting those for the wealthy expire, even as talks continued on extending them all.

The House bill was a political maneuver to satisfy Democratic lawmakers' supporters who oppose extending tax cuts for the wealthy. It has no chance in the Senate, where Democrats need Republican support to pass tax legislation.

House Republican leader John Boehner of Ohio used barnyard language to describe the House vote to reporters during a news conference.

"I'm trying to catch my breath so I don't refer to this maneuver going on today as chicken crap, all right? said Boehner, who is in line to become House speaker in January. "But this is nonsense, all right? The election was one month ago. We are 23 months from the next election, and the political games have already started trying to set up the next election."

Sweeping income tax cuts enacted under former President George W. Bush are to expire at the end of the year. If Congress does not act, taxpayers at every income level would be hit with a significant tax increase.

President Barack Obama and Democratic leaders in Congress want to extend the tax cuts only for individuals making less than $200,000 and married couples making less than $250,000. The bill passed by the House would do that.

The vote was 234 to 188. All but 20 Democrats voted in favor of the bill; all but three Republicans opposed it.

Republicans and some rank-and-file Democrats want to extend the tax cuts for everyone, and the White House has left open the door for a compromise to do that for up to three years.

Senate Republican leader Mitch McConnell of Kentucky has indicated he is open to a temporary extension of all the tax cuts.

Obama said Thursday he's optimistic Democrats and Republicans can reach agreement on critical issues in the coming weeks, including the tax controversy.

Speaking to more than 20 newly elected governors, Obama said making sure tax cuts don't increase for the middle class is his priority.

"I believe it will get resolved," Obama said. "That doesn't mean there might not be some posturing over the next several days. But I'm confident in the end people are going to recognize that it's important for families who are still struggling to have some relief and it's important for our economy to make sure that money is still out there circulating."

The White House is pressing Congress to extend jobless benefits and other tax credits enacted as part of Obama's massive economic recovery package last year. Those proposals could form the basis of a compromise on the Bush tax cuts.

Beyond unemployment insurance, the White House made the case Thursday for extending Obama's Making Work Pay tax credit for individuals, a tuition tax credit and a tax break that rewards employers who hire unemployed workers. All are to expire at the end of the year.

Obama's Council of Economic Advisers estimated that if Congress does not extend the jobless benefits, 2 million unemployed workers will lose coverage this month and 7 million will by November 2011.

Treasury Secretary Timothy Geithner and White House Budget Director Jacob Lew began holding closed-door meetings Wednesday with a small group of lawmakers from both parties to negotiate a deal on the Bush tax cuts. Those talks continued Thursday, even as the House voted on the Democratic plan. Democrats said the House vote wouldn't undermine bipartisan negotiations.

"We are putting this bill on the floor today because we believe it is important to extend tax cuts for the middle class," said Rep. Chellie Pingree, D-Maine. She said tax cuts for the wealthy have done nothing to stimulate the economy.

"It's time that we let those end," Pingree said.

Rep Dave Camp, R-Mich., one of the negotiators in the private talks, said the House vote was futile.

"It would be comical if it weren't so irresponsible," Camp said. "Their position is so precarious they won't even allow Republicans to offer amendments or any alternative. Why? Because Democrats know the Republican bill to extend the current tax rates for all taxpayers would pass with broad bipartisan support."

Mitch McConnell of Kentucky, the Senate Republican leader, said the House bill was "not going to go anywhere. You know, we are going to extend the current tax rates. We're not going to raise taxes on anybody. The only thing we're discussing now is just how long that extension will be."