WASHINGTON — With the government heading toward a year-end fiscal showdown, House Republicans approved extending the George W. Bush-era tax cuts for every working American on Wednesday in an effort to shore up a still-frail economy. At the same time, the Obama administration warned that mandated budget cuts could send some of America’s troops into battle with less training.
For all the action and talk, however, both taxes and spending were deeply enmeshed in campaign politics, with no resolution expected until after the November elections.
Democrats are demanding that any compromise to avoid the $110 billion in budget cuts that are scheduled to kick in Jan. 2 include a tax increase on high-income earners. Republicans reject the idea of raising rates on anyone as the economy struggles to recover.
‘‘There are five months remaining for Congress to act,’’ acting White House budget director Jeff Zients told the House Armed Services Committee. ‘‘What is holding us up right now is the Republican refusal to have the top 2 percent pay their fair share.’’
Later, Republicans moved to renew the Bush tax cuts for all. The cuts will otherwise expire Dec. 31, part of a combination of effects along with major spending cuts that have been characterized as a ‘‘fiscal cliff’’ for the economy. The bill passed 256-171 — 19 Democrats joined with Republicans.
There is no expectation that the Democratic-led Senate will consider the House measure, at least before the elections.
Democrats in the House countered with a plan backed by President Obama to extend the tax cuts for all but the highest-earning Americans. Their plan would raise the marginal top tax rate on incomes over $200,000 for individuals and $250,000 for couples from 35 percent to 39.6 percent. It failed, 257-170.
Analysis finds Romney plan would cut taxes for wealthy
Mitt Romney’s tax plan would provide large tax cuts to wealthy Americans and increase taxes on middle- and low-income households, according to an analysis by The Brookings Institution.
The report published Wednesday estimated households with incomes over $1 million would receive average tax cuts of $87,117 under Romney’s plan, while those earning $200,000 or less would pay higher taxes.
Brookings analysts concluded that Romney’s plan favors high earners “even when we bias our assumptions about which and whose tax expenditures are reduced to make the resulting tax system as progressive as possible.”
“For instance,” analysts said, “even when we assume that tax breaks — like the charitable deduction, mortgage interest deduction, and the exclusion for health insurance — are completely eliminated for higher-income households first, and only then reduced as necessary for other households to achieve overall revenue-neutrality, the net effect of the plan would be a tax cut for high-income households coupled with a tax increase for middle-income households.”
The Romney campaign dismissed the report as a liberal study. “President Obama continues to tout liberal studies calling for more tax hikes and more government spending,” Romney spokesman Ryan Williams said.
The analysis was conducted by three Brookings economists, including William G. Gale, an economic adviser to President George H. W. Bush, and Adam Looney, who served on Obama’s Council of Economic Advisers.
They determined Romney’s tax plan — which includes extending all Bush-era tax cuts, slashing all income tax rates by a fifth, and reducing the corporate tax rate to 25 percent — would reduce federal revenues by $456 billion in 2015.
Romney has not specified how he would compensate for the sweeping tax cuts. But making up for the lost revenue, Brookings analysts said, “would require deep reductions in many popular tax benefits.”
Poll shows president with lead in three key states
President Obama leads Republican challenger Mitt Romney by at least 6 percentage points in three key swing states, according to a new CBS News/New York Times/Quinnipiac University poll.
The president’s lead is 53 percent to 42 percent among likely voters in Pennsylvania, 50-44 in Ohio, and 51-45 in Florida, the survey published Wednesday showed.
In all three states, the candidates are nearly tied on a question about who would handle the economy better. And in all three, Obama’s approval rating is under 50 percent.
But in Florida, Obama outscores Romney by 13 points when the question is whether the candidates care about “the needs and problems of people like you.”
In Ohio, the margin is 17 points in Obama’s favor, and it is 19 points in Pennsylvania.
Obama also outpolled Romney on health care, national security, and likability.