UPDATE 3-US Senate bid to renew "middle class" tax cuts fails

* All Bush-era tax rates expire at end of 2010

* Obama says disappointed

* Reid hopes for deal next week

* White House talks with lawmakers to continue
(Adds Obama comments in paragraph 4)

By Kim Dixon

WASHINGTON, Dec 4 (BestGrowthStock) – Democratic measures to extend
tax cuts for most Americans, but not additional low rates for
the wealthiest, failed in the U.S. Senate on Saturday, as
Republicans and some Democrats blocked the plans.

The two Democratic plans to renew low tax rates for
individual income up to $200,000 and up to $1 million both
failed in procedural votes, as Republicans argued that low tax
rates for the wealthiest should also be extended.

No Republicans backed the Democratic proposals, and a few
Democrats voted against them.

President Barack Obama expressed disappointment on Saturday
and said negotiators needed to “redouble” their efforts in the
next few days to reach an agreement on the tax cuts. He said
doing so “will require some compromise.”

The rare Saturday votes were expected to fail, but
Democrats wanted to show that they didn’t support an extension
of the lower rates for higher-income individuals.

“It’s not that we want to punish wealthy people,” said
Democratic Senator Charles Schumer, who had proposed extending
the tax rates for those earning up to $1 million. “But they are
doing fine and they are not going to spend the money and
stimulate the economy.”

Democratic Majority leader Harry Reid, in between the
votes, said he hoped to come to a consensus on the tax issue by
the middle of next week but was not specific. He said he wanted
the Senate to adjourn by Dec. 17.

Senate Republican leader Mitch McConnell after the vote
said he was “relatively confident” that bipartisan talks would
lead to an across-the-board renewal of the tax cuts and that
the only unknown was the length of the extension.

Republicans also said the votes were a waste of time.

“The American people don’t want a political dog and pony
show,” Republican Senator Charles Grassley said. “The bottom
line is this: Stop the tax hikes.”

The votes came two days after the House of Representatives
passed an extension of the lower tax rates on individual income
up to $200,000. Democrats currently control both chambers but
have a larger majority in the House.

All the lower tax rates enacted under former President
George W. Bush in 2001 and 2003 will expire at the end of 2010
if Congress does not take action. [ID:nN01168155]

Taxes are levied marginally, so individual income of
$300,000 would get the lower rates on the first $200,000 of
income under that proposal.

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Republicans will take control of the House in January and
have more seats in the Senate following the party’s gains in
the Nov. 2 congressional elections.

The electoral shift has led some Democrats, including
Obama, to signal willingness to move toward the Republican
position on the Bush-era tax rates.

Obama’s top economic advisers are in talks with key
lawmakers on a potential deal that could renew all the lower
rates, including those for the wealthiest, for one to three
years, according to congressional aides.

In return, Democrats are demanding a one-year renewal of
jobless benefits for hundreds of thousands of Americans. The
benefits began to expire this week when lawmakers failed to
agree on an extension.

Separately, on Friday, a commission charged by Obama to
find ways to trim the $13.8 trillion debt garnered a
better-then-expected majority to support its plan to raise
taxes and cut spending. [ID:nN03113533]

Extension of all the Bush-era tax rates would cost about
$3.6 trillion over a decade, according to administration
estimates. Doing so for those who earn $200,000 and under would
cost $2.9 trillion, while the lower rates benefiting the
highest income groups would cost $700 billion.
(Additional reporting by Thomas Ferraro; Editing by Paul
Simao)

(Reporting by Kim Dixon; Editing by Paul Simao)

UPDATE 3-US Senate bid to renew "middle class" tax cuts fails