Updates: Both sides must work toward compromise, Obama says. | CNN

Democrats grumble about deal that would continue tax cuts and unemployment benefits. | Politico

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WASHINGTON – A White House-led effort to reach a deal on extending Bush-era tax breaks intensified Saturday after Senate Republicans blocked Democratic initiatives that would have continued those tax cuts for all but the wealthiest Americans.

In the Senate votes, an effort to extend tax cuts for families earning less than $250,000 a year – the plan backed by President Barack Obama and approved by the U.S. House on Thursday – was stopped, 53-36. Even though a majority of senators backed the measure, it failed to reach the 60 votes needed to prevent a filibuster. An extension of the tax breaks to families with a taxable income of less than $1 million a year was rejected by a similar vote, 53-37.

Shortly after the votes, President Barack Obama said "we need to redouble our efforts to resolve this impasse -- in the next few days -- to give the American people the peace of mind that their taxes will not go up on January 1st." He said finding a solution "will require some compromise, but I'm confident that we can get it done."

White House negotiators planned discussions with Republican and Democratic congressional leaders this weekend and into next week to try to reach a tax-cut compromise that would also include extending now-expired unemployment benefits.

The Senate votes were the culmination of two days of tax-cut theater – with Missouri's senators taking sharply opposing stands – that played out even though both sides knew that the measures would be blocked. Democrats felt the debate and votes were needed to get senators on the record on relatively progressive tax-cut plans; Senate Minority Leader Mitch McConnell denounced the tactic afterward as "meaningless show votes."

On Friday, Sen. Claire McCaskill, D-Mo., argued that limiting the tax cuts for families with incomes below $1 million would help restrain the budget deficit. "I don't know how anyone can keep a straight face and say they are for deficit reduction while they insist on a permanent tax cut for the wealthiest Americans, completely unpaid for," McCaskill said of the GOP stance in favor of giving tax cuts to everyone. "If they think it's OK to raise taxes for the embattled middle class because . . . [Democrats] don't give more money to millionaires, it really is time for people in America to take up pitchforks."

But Sen. Christopher "Kit" Bond, R-Mo., calling such arguments "populist demagoguery," insisted on extending the tax cuts for all income levels. "You shouldn't be raising taxes on anybody in a recession," Bond said, arguing that refusing to extend the Bush-era tax cuts for small businesses that make profits of $250,000 or $1 million would end up killing jobs in the private sector.

"Why raise taxes on the only people who are going to create the jobs that you want?" Bond said. "There's a hole in the populist argument that 'the rich don't need it': the small businesses that create the jobs are the ones that are making profits over $250,000. They put that back into hiring people, they expand, they give raises and buy equipment."

In the Senate votes, Bond and Sen. Mark Kirk, R-Ill, voted to block both Democratic measures; McCaskill backed both Democratic initiatives, while Sen. Dick Durbin, D-Ill., voted for the $250,000 tax-extension limit and against the $1 million income limit.

After the votes, McCaskill argued in a Senate speech that Republicans – by supporting "a deficit-busting, China-borrowing, print-more-money tax cut" to millionaires – were misinterpreting the message that voters sent in the Nov. 2 elections. She said it is "a complete fallacy that a small differential in personal tax rates to people on their second million dollars of income is going to create jobs."

But Sen. John Kyl, R-Ariz. – the assistant Senate Minority Leader and one of the Republicans negotiating with the White House on a compromise tax-cut deal – dismissed the Senate and House tax votes as mere "political catharsis on the Democratic side." He added, "Democrats have had to demonstrate to many of the people in their political base that they can't accomplish what their base would like them to accomplish."

Kyl called on both Democrats and Republicans "to sit down and try to negotiate this in a bipartisan spirit that would give people confidence in Congress and give the American people confidence that they could move forward with some degree of clarity about what their tax obligations are going to be."

While the details of a likely compromise on tax-cut extensions was not yet clear, there has been speculation that Congress will end up extending tax breaks for everyone -- at least temporarily. And many observers think that will be linked to a revival of two emergency federal unemployment insurances programs that expired this past week.

On Saturday, Obama said "it is simply wrong to even consider giving permanent tax breaks to the wealthiest Americans while denying relief to so many Americans who desperately need it and have lost their jobs through no fault of their own.

"As we work our way through this issue, we must not forget that last week some 2 million Americans who have lost their jobs also saw their unemployment insurance expire -- right in the middle of the holiday season."