Congress nearing deal on tax rates, jobless benefits

WASHINGTON - Their political options limited, Democrats and Republicans appeared to unite Sunday behind the outlines of an economic package that would temporarily extend expiring tax rates for all taxpayers as well as jobless benefits for millions of Americans.

Differences remained over details. Some Democrats continued to object to any plan that would continue Bush-era tax rates for those at the highest income levels, as Republicans want.

Without congressional action, tax rates would revert to pre-2001 and 2003 levels, meaning a tax increase for everyone.

Negotiations between the Obama administration and a bipartisan group of lawmakers center on a two-year extension.

Friday's jump in the unemployment rate to 9.8 percent added pressure on Republicans to accede to President Obama's demand for a one-year extension of unemployment compensation. A deal could be reached this week.

"I think most folks believe the recipe would include at least an extension of unemployment benefits for those who are unemployed and an extension of all of the tax rates for all Americans for some period of time," said Sen. Jon Kyl of Arizona, a GOP negotiator in the talks.

"Without unemployment benefits being extended, personally, this is a nonstarter," said Sen. Dick Durbin of Illinois, the second-ranking member of the Senate Democratic leadership.

Republicans insist that any extension of jobless aid must be paid for with cuts elsewhere in the federal budget. The White House opposes that, saying such cuts are economically damaging during a weak recovery. Senate Republican leader Mitch McConnell on Sunday said "all of those discussions are still under way."

Sen. Orrin Hatch (R., Utah) said Republicans would likely cede that point to the Democrats. "Let's take care of the unemployment compensation even if it isn't . . . backed up by real finances," Hatch said. "We've got to do it. So let's do it. But that ought to be it."

About 2 million jobless Americans will run out of benefits this month if they are not renewed, and the administration estimates 7 million people will be affected if benefits are not extended for a year.

The White House, however, also wants to include renewal of several other tax provisions that are expiring, including a tax credit for lower- and middle-class wage earners.

In a compromise, the administration prefers a two-year extension of the tax rates. Officials say that a one-year extension would put Congress and the president in the midst of a similar debate in a mere six months and that a three-year extension would cost too much and lose the support of liberals.

Democrats, though resigned to a deal, were not eager to embrace one. "We're moving in that direction," Durbin said. "And we're only moving there against my judgment and my own particular view of things."

Durbin and Kyl spoke Sunday on CBS' Face the Nation. Hatch appeared on CNN's State of the Union, and McConnell was on NBC's Meet the Press.