Senate Democrats are moving toward a vote next week on a bill to use the tax code to crack down on outsourcing of manufacturing jobs, a step that would signal the majority is punting on tackling expiring 2001 and 2003 tax cuts before the midterms.
As Democrats try to use control of the floor to offset a politically toxic environment, taking up the outsourcing bill would be a victory for members such as Senate Commerce Chairman John (Jay) Rockefeller, who have argued for voting on the populist anti-outsourcing bill and avoiding a vote on tax extensions that Republicans would call a tax increase.
Senate Majority Leader Reid on Tuesday night began the Rule 14 process on the outsourcing bill, and is likely to file cloture to set up a vote next week, sources said.
"We hope to have a vote by the end of next week," a senior Reid aide said.
The bill, offered by Reid, Senate Majority Whip Durbin, Senate Democratic Caucus Vice Chairman Charles Schumer of New York and Sen. Byron Dorgan, D-N.D., would create a payroll tax holiday for hiring U.S. workers who replaced foreign workers, a provision pushed by Schumer. It would deny a business deduction for costs associated with moving jobs overseas. The bill also includes "runaway plants" language long championed by Dorgan, which would prevent companies that relocate overseas to import products from deferring paying taxes on profits earned overseas until the profits are returned to the United States.
The bill has yet to be scored by the Joint Tax Committee or CBO.
Democratic leadership aides said no final decision on the remaining agenda for the work period has been made, with Democrats expected to hash out plans today.
"We are holding a caucus meeting tomorrow where we plan to continue to discuss a path forward," a Reid spokesman said Wednesday.
But chances of action on the expiring tax cuts, which were passed in 2001 and 2003 but expire this year, are falling fast, aides acknowledged.
Before adjourning and before Oct. 1, the Senate must find time to pass a continuing resolution funding the government at current levels, a step required due to Congress' failure to pass FY11 appropriations bills this year.
Durbin and Senate aides have also said that the chamber is likely to adjourn at the end of next week instead of Oct. 7 or 8 amid pressure from members eager to hit the campaign trail.
That course would leave no time for a vote on extending some tax cuts. President Obama wants to extend the lower rates for families earning less than $250,000 and individuals who make less than $200,000 while letting rates for the top 2 percent of earners return to pre-2001 levels.
Democrats have scheduled a cloture vote on a campaign finance disclosure bill for today. Coupled with plans to vote on the continuing resolution and the outsourcing bill next week and the possible early adjournment, "there may not be time to do the middle tax cut extension," a senior Democratic aide said. "Given that members very much want to do jobs and economy [legislation] there is some sense of moving those to the forefront, which provides less time and fewer opportunities for tax cuts."
"Every one reads every poll and now jobs and the economy are at the forefront of everyone's mind," the aide added.
Democratic staffers said action on a middle-class tax cut remains possible, if slim. Many Democrats see forcing a cloture vote and daring Republicans to filibuster a middle class tax cut as the best course among options that each have political drawbacks, the staffers said.
"Lots of members want to do it, administration officials that want to do it," the senior aide said. "A lot of people think this is a good contrast fight."
Senate Finance Chairman Max Baucus has said he is prepared to file a bill extending the tax cuts for the middle class this week. Baucus is ready to move if Reid and the caucus decided to tackle the issue, sources said.