Bush Tax Cuts: To Extend or Not to Extend?

WASHINGTON D.C. (TheStreet) -- The political battle for the hearts and minds of Main Street reached new levels in Washington D.C. on Monday, a day ahead of a scheduled vote on extending unemployment benefits for millions of out-of-work Americans.

While seemingly contradictory on the surface, the battle over unemployment benefits for struggling Americans is linked to the battle over extending the Bush tax cuts for the wealthiest, which are set to expire at the end of 2010. How can politics over giving minimal support to the jobless be tied up with making the rich richer? That's just politics, and it actually makes perfect sense, and it's all coming to a head in Washington.

President Obama had made a campaign pledge of allowing the Bush tax cuts to expire. During a Monday morning Rose Garden speech, President Obama again chided Republicans for blocking efforts to pass an extension of jobless benefits while working overtime to extend tax cuts for the rich. Democrats more broadly have tried to make the Republicans look bad by juxtaposing their refusal to extend jobless benefits with their full-throated support for continued upper class tax relief.

Democrats are already expected to see through the extension of middle class tax cuts, which will be a welcome extension of tax relief on Main Street, alongside any extension of jobless benefits. Yet there are rumblings in Washington D.C. that the moves on the political chessboard could, in fact, be leading up to a political compromise allowing the Bush tax cuts to be extended, something that would be a contradiction of the President's campaign promise and may not be received too well on Main Street.

Republicans have said they may use Congressional tactics to "hold the middle class tax cuts hostage" until they get their way on the Bush tax cuts for the richest Americans. Republicans are making the argument that with the economy as shaky as it is, any tax increases are a bad thing.

President Obama spoke harshly on Monday morning, accusing Senate Republicans of a "lack of faith in the American people" for repeatedly blocking passage of the jobless benefits extension bill.