A top Democrat signaled for the first time that the party might scale back plans to permanently extend Bush-era tax cuts for the middle class, as deficit worries grow in Congress.
House Majority Leader Steny Hoyer said in a speech Tuesday that Democrats would have to consider passing only a short-term extension of the middle-class tax breaks, which expire at the end of this year. In the longer term, taxes likely will be going up, at least for some people, he suggested.
"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…whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction," the Maryland Democrat said in prepared remarks to Third Way, a centrist Democratic think tank, in Washington.
When the time comes for a long-term plan, Mr. Hoyer added, "raising revenue is part of the deficit solution" along with spending cuts.
Republicans said Democrats were signaling their intent to raise taxes on the middle class.
Mr. Hoyer's comments mark the first time that a member of the House Democratic leadership has so clearly acknowledged the impact of deficit worries on tax policy. The Bush tax cuts passed in 2001 and 2003 are scheduled to expire at the end of this year, and include income-tax rate reductions, as well as an expanded child tax credit and relief from the so-called marriage penalty.
President Barack Obama as a candidate pledged to make some of the cuts permanent, while allowing breaks for families making $250,000 or more to expire. Democrats in Congress have made the policy a cornerstone of recent budgets. The policy would come at a heavy cost to the federal government—more than $2 trillion over the next decade, by some congressional estimates.
In recent weeks, Congress has struggled to pass an economic-relief measure amid the growing deficit worries. The latest version of the bill could have a price tag as low as $75 billion, down from $105 billion last week, almost all of it paid for with new taxes. The new bill jettisons a proposal to suspend long-planned cuts in Medicare payments to doctors, and pares $8 billion from a $24 billion package of assistance to states.
Mr. Hoyer again endorsed a fiscal commission Mr. Obama established this year, and pushed for a mix of spending cuts and tax increases. He said Congress should consider defense cuts as well as "a higher retirement age," possibly as life spans lengthen, for Social Security beneficiaries.
On taxes, Mr. Hoyer was less specific. He talked about raising "revenue more fairly and efficiently," language used by supporters of a value-added tax.
Mr. Hoyer's speech brought a round of criticism from Republicans, who emphasize spending cuts instead, and oppose allowing any Bush tax cuts to expire. House GOP Leader John Boehner of Ohio said Mr. Hoyer was admitting "that he supports raising taxes on the middle class to pay for more government spending."
For Democrats, one possible path would be to extend the cuts for six to 12 months, avoiding the difficult political questions raised by the issue in a lame-duck session after the midterm election.
Mr. Hoyer articulated what many in Washington had been whispering for weeks—that a short extension of the tax cuts is a possibility, if not a likelihood. It isn't just deficit politics driving the discussion, but political reality on Capitol Hill. Lawmakers are fatigued from the ambitious legislative agenda pushed since Mr. Obama took office, and there is little appetite for taking on yet another sensitive issue.
A Hoyer spokeswoman said the congressman was speaking for himself, not the broader Democratic leadership.
