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Democrats back off millionaires tax in year-end dispute

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.

But Republicans, frustrated that a bipartisan $1 trillion funding bill was being blocked by Senate Democrats, floated the possibility of repackaging the measure and passing it Friday in defiance of President Barack Obama and his allies in control of the Senate. Stopgap funding runs out Friday at midnight.

With time running short, Senate Majority Leader Harry Reid, D-Nev., met with Obama at the White House, then returned to the Capitol and sat down with the two top Republicans in Congress, House 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.

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. 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.

Democrats back off millionaires tax in year-end dispute 12/14/11 [Last modified: Wednesday, December 14, 2011 10:56pm]
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