Jim Kuhnenn, Associated Press
WASHINGTON (AP) — An outline of a bipartisan economic package is emerging that would temporarily extend the Bush-era tax rates for all taxpayers, while extending jobless benefits for millions of Americans.
Differences remained over details, including White House demands for middle- and low-income tax credits. But Republicans and Democrats appeared to come together Sunday, raising the possibility of a deal in Congress by the end of the week.
Some Democrats continued to object to extending current tax rates for high earners.
But without action, lawmakers face the prospect of delivering a tax hike to all taxpayers at the end of the year, when the current rates expire and revert to higher pre-2001 and 2003 levels.
Negotiations between the Obama administration and a bipartisan group of lawmakers centered on a two-year extension of current rates.
At the same time, a jump in the unemployment rate to 9.8% is putting pressure on Republicans to accede to President Barack Obama's demand that Congress extend unemployment insurance for a year. GOP congressional leaders had opposed an extension of benefits without cuts elsewhere in the federal budget.
"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, the Senate's Republican 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 have insisted that any extension of jobless aid 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.
Sen. Orrin Hatch, R-Utah, said Republicans would probably cede that point to the Democrats.