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Parties Maneuver for Edge in Fiscal Battle

Bill Clark/CQ Roll Call File Photo
Sen. Patty Murray said Monday that she would continue the fiscal debate into 2013 “rather than lock in a long-term deal this year that throws middle-class families under the bus.”

A Senate vote on extending the 2001 and 2003 tax cuts could come as soon as this week, but most likely next week.

This week, Senate Democrats have teed up a bill to give tax breaks to companies that insource jobs from overseas. Republicans are likely to vote to take up the bill, in part to seek a vote on their one-year extension of the Bush-era tax cuts, according to a senior GOP Senate aide.

But Democrats are likely to balk at the prospect of voting this week as they look to keep the issue alive into next week, when they expect to take up their own tax cut plan as a stand-alone bill, a senior Senate Democratic aide said. Democrats want to extend the cuts for households making less than $250,000, a position that President Barack Obama has been pushing in many swing states.

After Murray’s speech Monday, Sen. John Cornyn (R-Texas) said in a speech on the Senate floor, “It simply amazes me and discourages me that some people are willing to play chicken with our economy and national security.”

Democrats say they will stand firm on their position.

A Democratic aide said the sequester and tax issues could be solved “tomorrow” if Republicans break with anti-tax advocate Grover Norquist and “ask millionaires to pay their fair share.” The aide added that Democrats would rather have a bipartisan deal than allow the cuts to go into effect.

“There would be a lot of pain all around,” the aide said. “But, ultimately, it comes down to a choice between the sequester and whatever alternative Republicans will go along with, and if that alternative doesn’t include revenues, it’s probably impossible to craft an alternative that Democrats would support over the sequester as currently composed.” Without revenues, Democrats fear the alternative would likely have to include deep cuts to Medicare and other entitlements.

While Democrats appear to be holding a few trump cards in the lame-duck debate, Republicans may hold the ace if the debt ceiling needs to be increased. The Treasury Department expects to hit the limit before the end of the year; however, the administration typically has the ability to delay a default on the nation’s debts by using creative accounting maneuvers.

“I know there will be very considerable Republican resistance to raising the debt ceiling if we don’t have commensurate measures to get this spending addiction and these structural problems we have under control,” Sen. Pat Toomey (R-Pa.) said.

House Republican and Senate Democratic stances mark a 180-degree turn for each party from the debt ceiling fight that created the sequester in the first place.

Then, Democrats warned Republicans were imperiling the economy to further their policies, while Republicans defended using the debt ceiling vote as leverage to obtain spending cuts.

Now Republicans are arguing the defense cuts in particular could hurt the economy, even as top GOP officials continue to attack Obama’s 2009 stimulus law; in Boehner’s words, “government doesn’t create jobs.”

Republicans have focused on the policy effect of the spending cuts on the national defense and the economic effect of the expiring tax cuts.

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