Obama’s Democrats in disarray over expiring tax cuts

Monday, 22 November 2010 00:01 - - {{hitsCtrl.values.hits}}

Washington (Reuters): President Barack Obama’s fellow Democrats in the U.S. Congress, many upset with him for election losses, are in disarray over what to do about tax cuts for millions of Americans that are set to expire on December 31.

With time running out and high political and economic stakes, Obama is pushing Democratic leaders to determine if they can win an acceptable extension of the cuts, which he could sign into law.

Resurgent Republicans are demanding that all the tax cuts be renewed, including those for wealthier Americans – individuals making more than $200,000 and families above$250,000.

Obama favors renewing the tax cuts only for those at or below those level, saying the nation cannot afford to renew them for wealthier Americans.

Despite a number of options – including renewing all tax cuts or only those for the middle class or tying any extension to a renewal of jobless benefits – there is no indication a consensus is near.

“How the hell should we know when we will figure this out?” said a senior Senate Democratic aide. “This is the Democratic Party,” long known for internal struggles and diverse views.

“It seems like no one is on the same page,” said Chris Krueger of MF Global, a private firm that tracks Washington for investors. “It has the potential to be a train wreck.”

With some Democrats blaming Obama for their loss of control of the House in the November 2 elections, Obama’s ability to rally his troops is being tested on the expiring tax cuts, which were signed into law by Republican President George W. Bush.

“A lot of our guys, the progressives, don’t want to extend these tax cuts for anyone,” said a senior House Democratic aide. “They never liked them in the first place.”

The aide said some Democrats are now wary of Obama, who convinced them to overhaul the U.S. healthcare system – a landmark achievement that backfired and hurt them with voters.

“Our guys aren’t sure what comes next. Will Obama help them in 2012, or will just be focused on getting himself re-elected?” the aide said.