Dems drop millionaires tax in bill

Associated Press

WASHINGTON

Democrats backed away from their demand for higher taxes on millionaires as part of legislation to extend Social Security tax cuts for most Americans on Wednesday as Congress struggled to clear critical year-end bills without triggering a partial government shutdown.

Republicans, too, signaled an eagerness to avoid gridlock and adjourn for the holidays. With a bipartisan $1 trillion funding bill blocked at the last minute by Democrats, GOP lawmakers and aides floated the possibility of a backup measure to run the government for as long as two months after the money runs out Friday at midnight.

With time beginning to run short, Senate Majority Leader Harry Reid, D-Nev., met with President Barack Obama at the White House, then returned to the Capitol and sat down with the two top Republicans in Congress, Speaker John Boehner and Sen. Mitch McConnell of Kentucky.

Taken together, the developments signaled the end-game for a year of divided government — with a tea- party-flavored majority in the House and Obama’s allies in the Senate — that has veered from near- catastrophe to last-minute compromise repeatedly since January.

The rhetoric was biting at times.

“We have fiddled all year long, all year,” McConnell complained in a less-than-harmonious exchange on the Senate floor with Reid. He accused Democrats of “routinely setting up votes designed to divide us ... to give the president a talking point out on the campaign trail.”

Reid shot back that McConnell had long ago declared Obama’s defeat to be his top priority. And he warned that unless Republicans show a willingness to bend, the country faces a government shutdown “that will be just as unpopular” as the two that occurred when Newt Gingrich was House speaker more than a decade ago.

It was a reminder — as if McConnell and current Speaker John Boehner of Ohio needed one — of the political debacle that ensued for Republicans when Gingrich was outmaneuvered in a showdown with former President Bill Clinton.

At issue now are three year-end bills that Obama and leaders in both parties in Congress say they want. One would extend expiring Social Security payroll tax cuts and benefits for the long-term unemployed, provisions at the heart of Obama’s jobs program. Another is the $1 trillion spending measure that would lock in cuts that Republicans won earlier in the year. The third measure is a $662 billion defense bill setting policy for military personnel, weapons systems and the wars in Iraq and Afghanistan, plus national security programs in the Energy Department.

After a two-day silence, the White House said Obama would sign the measure despite initial concern over a provision requiring military custody of certain terror suspects linked to al-Qaida or its affiliates. U.S. citizens would be exempt.

The measure cleared the House, 283-136, with a final vote expected today in the Senate.

Officials said Democrats were drafting a new proposal to extend the payroll tax that likely would not include the millionaires surtax that Republicans opposed almost unanimously.

Republicans minimized the significance of the move. “They’re not giving up a whole lot. The tax they wanted to implement on business owners was something that couldn’t pass the House and couldn’t pass the Senate,” McConnell said in a CNBC interview.