STEVE CHIOTAKIS: Let's talk about the midterm election now, and what that means to economic policy coming out of the Congress. One of the issues the lame duck session will have to deal with is the tax cuts passed during the Bush administration that are set to expire at the end of this year.
Marketplace's Scott Tong is with us live from Washington with more on how that debate is expected to play out now that Republicans are set to takeover the chamber come January. Good morning Scott.
SCOTT TONG: Good morning Steve.
CHIOTAKIS: What do the Republicans want to do with these tax cuts?
SCOTT TONG: Well, they want to extend all of them. And what we're talking about is income tax cuts for every American taxpayer, those go back to 2001 and 2003. As well as lower taxes on investment capital gains and dividends. If Congress does nothing, all those tax cuts expire December 31st, Steve.
CHIOTAKIS: Yeah, alright, so we'll still have a Democratic-controlled Senate and White House. What do they want, and what do the midterm results mean?
SCOTT TONG: Well, Most Democrats including the president want to extend some of the tax cuts, only for households making less than $250,000. If your income's higher than that, they want the tax cuts to expire
and your rate goes up.
I spoke this morning to tax policy professor Len Burman at Syracuse. He thinks the Democrats last night just lost a bunch of negotiating leverage.
LEN BURMAN: My guess is the president will probably give some on taxes, to get some of his other priorities enacted. Or at least to keep the Republicans from totally undermining what he's done in the first two years, like health reform.
This morning Steve, Democrats indeed indicated a willingness to deal, on health care. Senate majority leader Harry Reid, who was narrowly reelected last night, said he's open to "tweaking" the law. So if that's an indication let the deal making begin. On health care, taxes, etc.
CHIOTAKIS: Marketplace's Scott Tong is Washington. Thanks Scott.
SCOTT TONG: You're welcome.