Fight over Bush-era tax slash moves to campaign trail

Congress prepared to leave town without voting to expand the Bush-era tax cuts Wednesday, choosing to shift the fight over one of the year's biggest partisan battles from the halls of Congress to the political campaign trail.Both Democrats and Republicans see latent political gains in carrying the tax fight to their home states, banking on their ability to induce voters that the other side is to blame for the impasse. Congress is expected to put the issue to a vote in the post-election lame-duck session.

The decision introduces a fiery matter into an election in which control of the House, and possibly the Senate are in the balance. What happens to the $3.7 trillion tax package will feel the pocketbook of almost every voter. It also has major implications for the federal budget and U.S. economy in the residue of President Barack Obama's first term. Most Democrats support extending the tax cuts to all but top earners -- individuals making $200,000 or more and families earning $250,000, for whom they favor letting the Bush cuts lapse. Unless Congress acts, all the tax cuts will slip at year's end. Republicans and some conservative Democrats favor extending the cuts for all, arguing that tax cuts for wealthier Americans would help businesses expand and create jobs.

Voters who are focused on pocketbook issues this campaign season will be offered two distinct views on the tax cut debate. As the tax cuts loomed large over the final days of congressional debate, both the House and Senate conducted a flurry of votes, even though both Democrats and Republicans were anxious to leave Washington for the campaign season. Congress was on track to reach an agreement to keep the government running by approving a stop-gap spending bill called a continuing resolution that would hew to 2010 spending levels. The resolution was needed because Congress had failed to pass any of its annual appropriations bills.

Both the House and Senate also conducted a series of votes this week on core issues designed to underscore Democratic priorities, even though the bills had little chance at final passage before the midterm elections. The House on Wednesday passed legislation to fund a new health program for responders and community members injured in the Sept. 11, 2001, terrorist attacks in New York, and re-open the federal victims' compensation fund. The bill has not passed the Senate.

As a last effort to address the nation's stubborn unemployment rate and promote jobs, the Senate voted also on an outsourcing bill that offered a payroll tax holiday to firms bringing overseas jobs back to the United States and imposed tax penalties on those that ship jobs overseas.The outsourcing bill failed largely along party lines, with some Democratic dissent, in what Sen. Mitch McConnell of Kentucky, the Republican leader, called "about as pure a political exercise as you can get."As the tax cut debate hangs over the political season, both sides offered a glimpse of the arguments as they prepared to make the case to voters.

"It's irresponsible for them to leave town," said Rep. John Boehner of Ohio, the Republican leader, as Democrats made it clear they would not be bringing the issue to the floor. "This is no way to run the people's House."Many economists say that as the economy continues to struggle it would be unwise to raise taxes on the middle class. They give credence to the proposal from Obama and Democrats to extend tax cuts for those making less than $200,000 and families making less than $250,000, despite the $3 trillion cost.But economists are split over extending $700 billion in tax breaks for the wealthy, as the GOP want to do.

Mark Zandi, chief economist at Moody's Analytics, has argued for phasing out the tax break for the wealthy but not until after 2011.Studies from the Tax Policy Center show just 1.7 percent of all American taxpayers earn more than the $200,000 cut off.