Bush tax cut fight could derail Senate small-business bill

Story highlights

  • A bill would give tax breaks to small businesses that hire new workers or give raises
  • Sen. McConnell says Republicans will insist on a vote on a tax-cut amendment
  • "We'll move through this amendment by amendment," Sen. Reid says

The Senate voted Tuesday to begin debate on a bill to give tax breaks to small businesses that hire new workers or boost pay for existing workers. But the overwhelming 80-14 vote masks the broad expectation that because of an unrelated fight over the Bush tax cuts, the small business bill is unlikely to pass the chamber.

"You have to wonder whether the bill that we will go to shortly is a serious exercise," said Senate Minority Leader Mitch McConnell, R-Kentucky, shortly before the vote, as he a noted a procedural technicality could scuttle the bill even if the Senate did approve it. "So I'm not sure that the majority is interested in passing something."

In addition, McConnell said Republicans would insist on getting a vote on an amendment to extend all the Bush-era tax cuts for one year, which he said would provide some certainty to taxpayers and give lawmakers time to agree on comprehensive tax reform. The GOP push for the tax cut extensions for all filers comes on the heels of President Barack Obama's announcement Monday that he wants to extend the Bush tax cuts only for those earning $250,000 and less.

Top GOP aides privately made clear that Republican senators would consider voting for the bill only if they were first allowed to vote on their tax cut extension proposal.

Senate Majority Leader Harry Reid was non-committal when asked if he would agree to the GOP demand, saying only that "we'll move through this amendment by amendment and see what we can work through."

A vote on the Republican amendment could be tough for some moderate Democrats, especially those facing re-election, as they will be forced to choose between supporting the policy of the Democratic president or their Republican opponents.

Democrats huddled in the Capitol with Treasury Secretary Tim Geithner and top Obama campaign aide David Axelrod to discuss the issue.

Reid said about his caucus that "generally everyone agrees" with the president's proposal although he acknowledged it is not unanimous.

Many Republicans like aspects of the small-business tax bill. But they say because it originated in the Senate, it violates a constitutional requirement that revenue bills first pass the House, and therefore it couldn't become law in its current form.

But Republicans also said they consider the bill to be more about political messaging than serious legislating, so that technicality might be moot.