* Bush-era cuts expire at year end with no action
* Democrats seek jobless benefit extension
* Reid signals multiyear extension possible
(Recasts with Reid comments, additional lawmaker comments)
By Richard Cowan and Kim Dixon
WASHINGTON, Nov 16 The top Democrat in the U.S.
Senate said on Tuesday he was willing to consider a temporary
tax cut extension for all income levels, a step that could pave
the way for a possible deal with Republicans on Bush-era tax
"This is something we will take a look at," Senate Majority
Leader Harry Reid told reporters, referring to a plan to extend
all the cuts for two or three years.
Many leading Democrats like Reid previously opposed
continuing tax cuts for the wealthiest, while they want a
permanent extension of existing tax cuts for those individuals
making $200,000 or less annually.
Reid and his fellow Democrats will hold a second day of
closed meetings on Wednesday to talk about upcoming
legislation. While agreeing to look at extending all current
tax cuts, Reid said he personally opposed the idea.
"For people to say that these upper-income tax cuts affect
most small business is simply not true. My main concern is to
prevent a tax hike on the middle class," he said.
Democrats are politically weakened following the Republican
takeover of the House of Representatives and their big gains in
the Senate in the Nov. 2 congressional elections.
Powerful Democrats are still pushing to give added tax
protection to the middle class. Senate Finance Committee
Chairman Max Baucus said it was "my intent, my hope, my desire"
to put forward a permanent extension of middle class tax cuts
President Barack Obama has asked congressional leaders to
meet with him on Thursday to discuss tax cuts. Legislation is
not expected to come up for a vote until after next week's
Thanksgiving break at the earliest.
A deal on a temporary extension of the Bush-era tax rates
could also be linked to renewal of unemployment benefits for 2
million Americans about to lose them, a senior Republican in
the House of Representatives said.
Representative Pete Sessions, a Republican in leadership,
said he could back extending jobless benefits, favored by
Democrats like House Speaker Nancy Pelosi, in exchange for an
extension of all Bush-era tax cuts, including for the
"What we're going to do is sit down and talk with Mrs.
Pelosi," Sessions told Reuters as he left a meeting of House
Republicans. "I see nothing wrong with her winning as long as
the American people do."
Jobless benefits for 800,000 Americans will expire on Nov.
30 if Congress fails to act. Two million in total would lose
benefits by the end of December.
The benefits have been renewed several times as the country
struggles with near 10 percent unemployment, but Republicans
have sought to limit them.
A top Democrat also suggested a deal on taxes and
unemployment benefits could be linked.
"It really strikes me as hard to explain why we would give
charity to the richest people in America with additional tax
cuts of $100,000 a year and deny the basic necessities of life
to people who are out of work through no fault of their own,"
said Richard Durbin, the No. 2 Democrat in the Senate.
Liberal Democratic Representative Jan Schakowsky said a
temporary extension of all rates was looking like a possible
"It may be" the deal that can pass, she said, after a
meeting of House Democrats. "I'd pass the middle class and not
the upper income. I hope if we do extend (the upper income
rates), it's for not more than a year."
Bush-era tax cuts for all individuals expire on Dec. 31 and
Democrats, who still control Congress, have only a few weeks to
make a deal with Republicans on extending them.
The parties agree on an extension of lower rates for
individuals earning less than $200,000 but disagree whether to
extend those rates for the highest earners. Republicans say the
economy cannot stomach any higher taxes, while Democrats say
the nation cannot afford the cost of lower rates for the
Obama signaled willingness to compromise with Republicans
following their election gains but says he wants to make the
lower tax rates permanent for the middle class and signaled
any extension for the wealthy must be temporary.
But Democrats, who now control both houses of Congress,
were unable to broker a deal before the election, and may now
have to settle for a temporary extension of all the rates to
prevent taxes rising on Jan. 1 on nearly every American.
Still, the chances that lawmakers will not get in line to
make a deal remain, especially with an empowered Republican
conservative Tea Party movement.
The leader of the Republicans' Tea Party Caucus in the
House rejected the idea of linking a tax cut extension to an
extension of unemployment benefits.
"I don't think that the American people should have to pay
for that by having to have some new massive spending tied to
it," Representative Michele Bachmann said in an interview with
ABC's "Good Morning America." "If that's the case, I don't
think you are going to see the Republicans go along with it."
(Additional reporting by Donna Smith and Thomas Ferraro;
Editing by Peter Cooney and Cynthia Osterman)