House Majority Leader Steny Hoyer said Tuesday that tax increases will eventually be necessary to address the nation's mounting debt, raising a difficult election-year issue as Democrats fight retain control of Congress.In the shorter term, Hoyer raised the possibility that Congress will only temporarily extend middle-class tax cuts set to expire at the end of the year. He pointedly suggested that making them permanent would be too costly.
Tax cuts enacted under former President George W. Bush are scheduled to expire at the end of the year, affecting taxpayers at every income level. President Barack Obama proposes to permanently extend them for individuals making less than $200,000 a year and families making less than $250,000--at a cost of about $2.5 trillion over the next decade.
"As the House and Senate debate what to do with the expiring Bush tax cuts in the coming weeks, we need to have a serious discussion about their implications for our fiscal outlook, including whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction," said Hoyer, a Maryland Democrat.
The tax cuts will be a big political issue in many congressional elections this fall, providing potential fodder for both political parties. Democratic leaders have yet to lay out a schedule for dealing with the tax cuts, but many rank-and-file Democrats want to extend them before the elections, so they can campaign on passing tax cuts for the middle class.
Republicans argue that many of the high earners who would face tax increases under Obama's plan are small business owners struggling to stay afloat in a tough economy.