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Who will get Bush tax cuts? Congress can't decide.

Unable to agree on who should be eligible to continue to receive the Bush tax cuts, which expire Jan. 1, President Obama and congressional leaders decided to convene a panel Tuesday.

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Sen. Charles Schumer (D) of New York proposes extending tax cuts to all but those earning more than $1 million. It makes for a cleaner case that Republicans favor tax cuts for millionaires.

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But Senate majority leader Harry Reid is holding out for an up-or-down vote on extending tax cuts with the $250,000 cutoff point. “The $250,000 middle-class vote is extremely important," he said in a briefing with reporters on Tuesday.

“This is where the diversity of the Democratic Party becomes a confounding element,” says Professor Baker. “You’ve got Max Baucus from Montana and Chuck Schumer from New York and Mary Landrieu from Louisiana all with different views of wealth and prosperity. Senators are reflecting the views of those they represent.”

In some parts of the country, $250,000 doesn’t look that rich. “I hear all the time in New Jersey that there are a lot of families with a teacher and a policeman in the family who end up in that range. They don’t consider themselves rich,” says Rep. Rush Holt (D) of New Jersey. But he still favors a $250,000 cutoff point.

“There have been and will be inequities among the states,” he adds. “We’ve got to raise revenue to pay down the deficit. Even if you wanted to do it all by cuts you couldn’t."

'We can't afford any of these tax cuts'

Other Democrats question whether any tax cut is appropriate at a time of soaring deficits. “We can’t afford any of these tax cuts,” says Rep. Bobby Scott (D) of Virginia. “It is hard to imagine that extending all of the tax cuts at a cost of $3.7 trillion is fiscally irresponsible but extending $3 trillion worth of tax cuts [to families earning less than $250,000] is somehow fiscally sensible."

There is broad agreement on one point, at least: that uncertainty about tax rates that take effect in just a month is worrying voters, troubling businesses, and hurting the economy.

“Congress creates too many tax cuts that are enacted for just a year,” says Senator Baucus, who favors a $250,000 cutoff point. “There’s too much uncertainty created by acts of Congress.”

The panel is expected to begin meetings as early as Wednesday morning. If members fail to come to terms on a plan, the issue will likely be resolved on the floor of the House and Senate, where Democrats, until January, still hold a majority.

A final deal could also include an extension of unemployment insurance that expires Nov. 30, affecting some 2 million families.


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