When Congress returns this week to begin its lame duck session, once of the key issues that needs to be tackled is preventing massive tax hikes in January. If current tax rates (set by the tax relief packages in 2001 and 2003) are not extended before the end of the year, every American will face a huge tax increase. Republicans have been pushing to make the current tax rates permanent and provide some certainty for job creators, but some Democrats, and President Obama, have resisted.

However, last week, the White House sent signals it might be willing to consider extending all the rates. Reuters reported, “The White House sent more signals on Thursday of the potential for a tax cut compromise with newly emboldened Republicans, who want to extend the cuts for wealthier Americans as well as the middle class. ‘The president has been clear that extending tax cuts for middle-class families is his top priority and he is open to compromise to get that done,’ said White House spokesman Bill Burton.”

Hopefully, the White House is beginning to agree with the several Senate Democrats and over thirty House Democrats who have signaled that they want to prevent any tax increases at the end of the year. In September, Sen. Ben Nelson (D-NE) said, “I support extending all of the expiring tax cuts until Nebraska’s and the nation’s economy is in better shape, and perhaps longer, because raising taxes in a weak economy could impair recovery.” Sen. Joe Lieberman (ID-CT) said, “I don’t think it makes sense to raise any federal taxes during the uncertain economy we are struggling through. The more money we leave in private hands, the quicker our economic recovery will be.” Democrat West Virginia Gov. Joe Manchin, now Senator-elect, said, “I wouldn’t raise any taxes.” And Thirty-one House Democrats wrote to Speaker Nancy Pelosi (D-CA), “Raising any taxes right now could negatively impact economic growth.” Meanwhile, Rep. Gary Peters (D-MI) was even more emphatic: “Extending the 2001 and 2003 tax cuts for all earners is the right thing to do as anything less jeopardizes economic recovery.”

Yet President Obama is apparently being pulled back from this emerging bipartisan consensus by his far-left base. According to The Washington Post, “On the heels of the Democratic Party’s huge losses in last week’s midterm elections, liberal activists have begun planning to push President Obama on a series of issues, demanding that he not cede any ground to Republicans. Liberal groups have blasted Obama at times over the past two years as not being sufficiently dedicated to their positions – history that factored into their criticism of the White House on Thursday for signaling that it will compromise with the GOP on the issue of extending tax cuts that are scheduled to expire this year. . . . [The president] has signaled that he wants to find big issues on which to compromise, with an eye toward his reelection campaign in 2012. But that signal has not gone over well with the liberal base. Nor did comments Wednesday by top Obama adviser David Axelrod, who told the Huffington Post that ‘we have to deal with the world as we find it.’ Liberals viewed the remarks as suggesting that the White House would accept a temporary extension of tax cuts for family income above $250,000. (The White House played down the remarks and said no formal decision has been made.)”

The Wall Street Journal adds, “The White House scrambled Thursday to tamp down a burst of anxiety among liberals worried that President Barack Obama would agree to extend Bush-era tax cuts for the wealthiest Americans. Liberal economists and activists were responding to comments senior White House adviser David Axelrod made to the Huffington Post, which reported that Mr. Axelrod said the administration was ready to accept a temporary extension of all such tax cuts, which are due to expire at the end of the year. . . . Liberals jumped in . . . accusing Mr. Obama of capitulating without a fight. . . . White House advisers sought to reassure liberals that Mr. Obama’s position hadn’t changed.”

So will President Obama side with liberals who apparently want to raise taxes on small businesses come January, or with a growing chorus of Democrats in Congress saying now is not the time to raise taxes on anyone? As Senate Republican Leader Mitch McConnell told Reuters, “While the president and some of his allies in Congress have a strange desire to raise taxes on hundreds of thousands of small businesses across the country, we would welcome the president’s help to extend all the current tax rates so that no one sees a tax hike.”

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