Biden offers negotiation on extending tax cuts for the wealthy

Reporting from Washington

Vice President Joe Biden said the administration may be open to extending the George W. Bush-era tax cuts to higher-income households, another volley in the simmering tax debate that is likely to be the lame-duck Congress’ top order of business after the midterm election.

President Obama has said the nation cannot afford tax breaks for the wealthy because the cost of continuing them and others would climb to nearly $4 trillion. But Biden suggested a willingness to extend the cuts for households making more than $250,000.

“We’re open to speak to the Republicans, if they really mean it,” the vice president said Friday evening on Bloomberg Television’s “Political Capital with Al Hunt,” according to a Bloomberg report. “If they’re talking about deficit reduction, if they’re willing to move, I think there’s a possibility.”

Aides downplayed Biden’s comments Saturday, saying he has said nothing different than what the Obama administration has maintained throughout the debate: The tax cuts must be extended for middle-class households before considering continued tax breaks for the wealthy. Congressional estimates put the cost of extending the tax cuts for everyone at nearly $4 trillion over 10 years. Eliminating the breaks for the wealthy reduces the tab by about $700 billion.

Senate Minority Leader Mitch McConnell of Kentucky did not appear to take the vice president’s comments as a serious offer.

“It’s a real challenge to believe it’s anything other than a preelection attempt to distract voters from the administration’s record — and its oft-stated plan to sock America’s job creators with a massive new tax hike sometime between now and January,” McConnell said in a statement.

A potential compromise offer from the administration would be a nod to Republicans and some moderate Democrats, who have insisted that the tax cuts should be permanently extended to all households. Obama proposes extending the tax breaks to all but top earners — couples making more $250,000 and individuals making more than $200,000. Tax analysts say those earners make up about 2% of Americans.

Unable to resolve the issue before they left Washington to stump for the Nov. 2 election, lawmakers brought the heated debate onto the campaign trail.

Republicans, whose momentum in the campaign could put the GOP in control of the House, have so far refused to budge, insisting that households making beyond $250,000 also get permanent tax cuts, despite the additional cost to the deficit. They argue that higher taxes would curtail a struggling economy and hurt small-business owners and professionals.

The tax cuts were passed in 2001 and 2003. If all the tax breaks are allowed to expire at the end of the year, nearly every American taxpayer would be affected.

Not only would marginal tax rates rise if nothing is done, but taxpayers would also see the return of higher taxes for married couples, a higher estate tax, lower credits for children, and other changes.

lisa.mascaro@latimes.com