US Senate bid to renew "middle-class" tax cuts fails

* All Bush-era tax rates expire at end of 2010

* Obama draws line in sand on possible compromise

* Reid hopes for deal next week

* White House talks with lawmakers to continue (Writes through to add Obama comments)

By Kim Dixon and Patricia Zengerle

WASHINGTON,  (Reuters) - Democratic measures to extend tax cuts for most Americans failed in the U.S. Senate on Saturday as Republicans -- and some Democrats -- blocked them because they did not also extend low rates for the wealthy.

President Barack Obama said he was disappointed with the vote, but indicated he was open to compromise on the tax cuts enacted under former Republican President George W. Bush, if certain conditions were met.

The Democratic plans -- to renew low tax rates for individuals with income up to $200,000 and for those making up to $1 million -- failed in procedural votes, as Republicans said low tax rates for the wealthiest should also be extended.

No Republicans backed the Democratic proposals, and a few Democrats voted against them.

Saturday's rare Senate votes were the latest skirmish in the battle over the tax cuts, which expire at the end of the year.

Obama and other Democratic leaders want to extend only the cuts for low- and middle-income Americans, contending the tax breaks for the wealthy would add too much to the yawning U.S. budget deficit.

Republicans, who dismissed Saturday's vote as a political stunt because the measures had been expected to fail, argue that raising taxes for the rich is a mistake that would cost jobs because wealthy Americans provide employment.

"Those provisions should have passed," Obama told reporters. "I continue to believe that it makes no sense to hold tax cuts for the middle class hostage to permanent tax cuts for the wealthiest 2 percent of Americans -- especially when those high-income tax cuts would cost an additional $700 billion that we don't have and would add to our deficit."

He said negotiators needed to "redouble" their efforts to ensure middle-class Americans did not face higher taxes on Jan. 1.

A White House official said Obama told Democratic congressional leaders on Saturday he was open to compromise but would oppose even a temporary extension if it did not include an extension of benefits for the unemployed and extension of other tax cuts that benefit middle-class families.

CONSENSUS WITHIN DAYS?

COFLZephyr wrote:

Let the cuts expire for everyone then start over with new legislation that give cuts to those making less than $250,000 an year and no breaks for the stinking wealthy. Then when the Repubs vote against the tax cuts for the middle class it will prove what they are really all about….. puppets for the wealthy and nothing more.

COFLZephyr wrote:

Sorry to say Obama is being a wimp. Just let the cuts expire for everyone and stop trying to negotiate with the Repubs.