Dems struggle for resolution on taxes, spending

WASHINGTON (AP) - Behind in the polls and split on the issues, Democrats are grappling with politically difficult decisions over tax cuts and federal spending in the final days before Congress adjourns for midterm elections.

Republicans hope to make the most of it.

As a result, President Barack Obama's request to lawmakers to extend expiring tax cuts for all except upper-income earners faces an uncertain future. At the same time, legislation needed to allow normal operations of the federal government after Sept. 30 is likely to trigger one more showdown in the House over spending before voters decide on Nov. 2.

The maneuvering comes less than six weeks before elections in which Republicans are challenging Democrats for control of the House and possibly the Senate, and polls suggest the GOP is gaining the trust of the public on the key issue of handling the economy.

Democrats have yet to unveil their stopgap spending bill, which is expected to tide the government over until lawmakers can reconvene after the elections. Aides have said the measure is likely to call for a continuation of most, if not all, programs at current spending levels.

In the House, Republican Leader John Boehner of Ohio has signaled he is prepared to challenge that as excessive, and the GOP recently announced it wants to cut spending back to the levels of three years ago. "Exceptions should be made for programs affecting seniors, veterans and national security," lawmakers said, estimating their plan would save nearly $100 billion in the coming year.

Democrats have said that would amount to unacceptable cuts. But officials have also said they may try to deny Republicans a vote on their proposal for fear it would give them ammunition for a round of campaign commercials accusing Democrats of supporting big government.

In the Senate, Republican Leader Mitch McConnell of Kentucky said he expected the House GOP approach would enjoy support, but stopped well short of pledging to vote for it.

He also signaled he may be willing to consider some of the $20 billion in new requests that Obama recently submitted, money for Pell Grants, NASA, the Postal Service and other accounts that Boehner and his rank and file appear intent on criticizing.

McConnell's statements on spending underscore that Congress must approve a short-term spending bill or risk a government shutdown, a collision neither party appears to want a month and a half before the elections.

There is no such consensus on taxes.

In recent days, the president has accused Republicans of holding "middle-class tax cuts hostage" by insisting that cuts enacted during the Bush administration be extended for all wage earners, and of seeking to protect "millionaires and billionaires."

On Monday, he said the choice was between tax breaks for the wealthy and ever mounting red ink.

"I can't give tax cuts to the top 2 percent of Americans ... and lower the deficit at the same time," he said. "At some point, the numbers don't add up."

But Obama faces a revolt from 30 rank-and-file House Democrats - nearly all in difficult races this fall. Citing the "fragility of the economy and slow pace of recovery," they wrote Speaker Nancy Pelosi last week that it "makes good sense to keep things as they are in the short term."

Echoing Republicans, they also cited statistics saying that "up to one-third of high-income taxpayers are small business owners, our nation's job creators and the backbone of our economic recovery."

According to Democratic officials, other lawmakers are lobbying Pelosi quietly not to schedule a pre-election vote on taxes unless the Senate passes legislation first. The concern, these officials added, is that they will be required to cast a difficult vote without any certainty that legislation will reach Obama's desk.

Aides to Pelosi said during the day no decision had yet been made about the issue.

Jim Manley, a spokesman for Senate Majority Leader Harry Reid said the Democrats' hope was "to try and cut taxes for the middle class, but the Republicans aren't going to allow us to get anything done before the election."

Manley noted that Reid's options are limited because Democrats lack the 60 votes needed to pass legislation over unified Republican opposition.

But Republicans counter Reid faces opposition from within his own caucus and that several of the party's Senate candidates say they want to retain all of the tax cuts.

Either way Obama's allies move, Republicans stand ready to attack them for raising taxes.

Obama's approach would raise taxes on those who have "been hit hardest by this recession and who we need to create the jobs that will get us out of it," McConnell said last week. "We can't allow this administration to demand that small business owners in this country pay for its own fiscal recklessness."

He spoke in a scathing speech on the Senate floor in which he said at least five Democrats "are coming round on this issue. They oppose the tax hikes the administration is proposing."

While McConnell said enacting Obama's proposal spelled trouble for the economy, Boehner focused on the prospect of no legislation.

"The last thing we need in a struggling economy is a tax hike on American families and small businesses, but if Washington Democrats fail to act, that's what every single taxpayer will get on January 1," he said in a statement.