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WASHINGTON (Reuters) - The incoming Republican chairman of the powerful tax-writing committee in the House of Representatives said on Wednesday extending Bush-era tax cuts for all income groups could slip into next year if Democrats don't compromise with Republicans.
"If we don't get cooperation to address it during the lame duck (session) we'll have to do it next year," Representative Dave Camp, in line to take over as chairman of the tax-writing Ways and Means Committee, told Reuters after his party won control of the House of Representatives on Tuesday.
Camp said he was willing to talk to President Barack Obama's administration about a potential compromise, but still prefers a permanent extension of tax rates enacted under former President George W. Bush.
"I'd prefer to do it as soon as possible but if not, it would be the first item we'd address," he said.
Republicans favor fully extending the lower tax rates for all Americans, while Obama and most Democrats want to renew them only for individuals with annual income up to $200,000 and family income up to $250,000.
Obama signaled a willingness to talk to Republicans to prevent all the rates from expiring, earlier on Wednesday.
"How that negotiation works itself out I think it's too early to say," he said at a news conference.
"I'm willing to talk with the administration about their proposal might be," Camp said.
Wall Street until recently had counted on a temporary extension on all the tax cuts, but the chance of deadlock have increased in recent weeks, pushing out the issue.
Camp, a 10-term Michigan congressman, is also a member of the president's 18-member deficit commission, which is due to issue a report in December spelling out recommendations to cut the deficit.
Many are skeptical that the 14 members of the commission will be able to agree on recommendations so that Congress can vote on them, given divisions among the parties about tax and spending priorities.
Camp echoed Republican House leader John Boehner's comments that the party's top focus will be spending cuts, but he said freezing spending at 2008 levels is just a first step.
In September, Republicans vowed to cut government spending to 2008 levels, asserting that such a move would achieve $100 billion in savings immediately. But that is just a drop in the bucket compared to last year's budget deficit of $1.29 trillion.
"That was meant just to be something we could do now -- that was not meant to be a 'be all end all'," to deal with deficit, Camp said.
The deficit commission has not yet begun its deliberations in earnest, although it is just a few weeks from issuing a report.
Camp is described by many as a likable lawmaker with good relationships with Democrats. He has taken an interest in overhauling of the tax code - which both Republicans and Democrats agree is inefficient and confusing.
"He may not be a show horse, but I think he will be an effective Ways and Means chairman," said Mark Bloomfield, president of the American Council for Capital Formation, a corporate-backed group.
Despite an ability to work with Democrats, Camp will likely take his marching orders from the Republican leadership, which may come under pressure from its new conservative members. Some in the anti-tax Tea Party take a hard line on tax issues.
Camp has been supportive of the trade pacts but has also called for changes to auto and beef provisions of a pending trade deal with South Korea.
Reporting by Kim Dixon; editing by Chris Wilson