Deal emerges on tax cuts

WASHINGTON — Senate leaders from both parties on Sunday sketched the broad outline of a compromise to extend the expiring Bush-era tax cuts for all Americans in exchange for extending benefits for the millions of long-term unemployed.

The outlines of compromise emerged after Republicans quashed an extension of unemployment benefits last week and then Senate Democrats failed on Saturday to cut off debate in order to pass legislation that would extend the tax cuts for all but the top 2 percent of earners.

With each side unable to impose its will, talks involving the administration are accelerating as all sides now seek middle ground ahead of a self-imposed congressional deadline of Dec. 17.

"It's pretty clear now that taxes are not going up on anybody in the middle of a recession," Senate Minority Leader Mitch McConnell, R-Ky., said Sunday on NBC's "Meet the Press." "I think we will extend unemployment insurance."

McConnell also clarified that he doesn't think there's enough time before a congressional recess to repeal the military's "don't ask, don't tell" policy and allow for openly gay members of the armed services.

Appearing on the CBS show "Face the Nation," Senate Republican whip Jon Kyl of Arizona said that compromise talks are focusing on another extension of unemployment insurance and an "extension for some period of time" of the Bush-era tax cuts. Talk is now centered on a two-year extension, perhaps three years.

Senate Democratic whip Richard Durbin of Illinois, a guest on the same show, acknowledged that any deal would be a quid pro quo.

"Without unemployment benefits being extended, this is a non-starter," Durbin said, adding that it would be unacceptable for Congress to fail during the holidays to extend jobless benefits for 6.3 million Americans who have been out of work now for longer than six months.

President Barack Obama set the tone for the compromise in remarks after the failure to extend Saturday the Bush-era tax cuts for just the middle class. Failure to find compromise, he acknowledged, would mean all Americans see their taxes rise, because under current law the rates revert back to pre-2001 levels.

"We need to redouble our efforts to resolve this impasse — in the next few days — to give the American people the peace of mind that their taxes will not go up on January 1st," Obama said. "It will require some compromise but I'm confident that we can get it done."

The president on Saturday signed legislation to keep the government funded through Dec. 18. But Congress is torn over how to continue funding through the end of the fiscal year, Sept. 30, an issue being worked out by Lew while Geithner negotiates on tax issues.

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