News Column

Democrats Express Frustration Over Obama's Tax Cut Deal

December 8, 2010

David Lightman and William Douglas

Taxes

Democratic leaders Tuesday struggled to calm the turmoil over President Barack Obama's tax cut compromise, as the president's usual Capitol Hill allies made it clear that they're uneasy and downright angry about the deal's extension of tax cuts for the very wealthy.

"This is very troubling for all of us," House Democratic Caucus Chairman John Larson of Connecticut said of the deal, announced a day earlier.

While it appeared the deal could win approval once the anger cools, the eruption Tuesday by Democrats was unlike anything seen during the 23 months of Obama's presidency.

A group of House of Representatives liberals circulated a letter telling Obama to "not back down." House Judiciary Committee Chairman John Conyers, D-Mich., charged Republicans with engaging in "legislative blackmail," and Sen. Bernard Sanders, I-Vt., called parts of the plan a "moral outrage."

As Obama spoke to the nation during his afternoon news conference, Senate Majority Leader Harry Reid, D-Nev., emerged from a lively two-hour closed door meeting with Democrats.

Asked if he and his caucus could sign off on the deal, Reid said, "No. I think we're going to have to do some more work on it."

At the White House, Obama was frustrated with the icy reaction from his colleagues.

"Look at what I promised during the campaign," he said. "There's not a single thing that I've said that I would do that I have not either done or tried to do."

And, he added, "To my Democratic friends, what I'd suggest is let's make sure that we understand this is a long game. This is not a short game."

The deal would extend Bush-era income tax cuts for all income groups for two years, an agreement that Obama called a "framework" for final legislation. House and Senate Democrats last week voted to limit the extension to individuals who earn less than $200,000 and couples making less than $250,000 annually, an effort Obama supports.

The Senate is expected to act first on the new deal. Democrats still control 58 of the 100 seats, and 60 votes are needed to cut off extended debate. If all 42 Republicans back the Obama plan, Democrats are expected to be able to get at least eight moderates and Senate leaders to join them.

Most Republicans expressed enthusiastic support, but not all. Sen. Mike Crapo, R-Idaho, noted that just last week, he voted for a bipartisan deficit commission's recommendations to slash nearly $4 trillion from deficits in the next decade.

So voting for a tax package that would send the deficit soaring is not an easy vote. "It's time to stop driving up the deficit," Crapo said.

Democrats were in a feistier mood as they met privately with Vice President Joe Biden at the Capitol.

Biden, who reportedly told senators that "it's a bad situation and a good deal," methodically explained the plan's details. Several economists offered explanations of how the changes would help spur growth.

Few senators emerged from the two-hour session convinced, though, and some were absolutely opposed.

Reid said the concerns were "wide ranging." Moderate Sen. Ben Nelson, D-Neb., said that while there was "no rebellion" during the meeting with Biden, senators' questions were "very probing."

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Sen. Dianne Feinstein, D-Calif., often a bellwether on controversial measures, said the "size of the package" gives her pause. But, she added: "If we don't do what the president wants, what effect does this have? That needs more thought."

The plan will continue the Bush-era income tax cuts for all income levels, and impose a 35 percent tax on estates of more than $5 million. Most Democrats consider those proposals a giveaway to the wealthy, since the current top income tax rates of 33 percent and 35 percent would be retained, instead of reverting to the pre-Bush levels of 36 percent and 39.6 percent. There is no federal estate tax in 2010, but it would have risen next year to 55 percent on estates of more than $1 million.

But Democrats like some of the provisions. Funding for extended unemployment benefits, which ran out Dec. 1, would continue for 13 months. The payroll tax for all workers would drop from 6.2 percent to 4.2 percent next year.

The bigger battle over the plan appears likely in the House, where Democrats control 255 of the 435 seats for the next few weeks. Starting next month, the numbers are nearly reversed, with a 242-seat Republican majority. Democratic leaders are reminding colleagues that they're hardly likely to get a better deal next year.

Still, liberals are in control of the House at the moment, and they're fuming, charging that Obama had abandoned not only his principles, but also his principal constituency, and they spent much of Tuesday teeing off.

"This is a fight for the heart and soul of the Democratic Party and the nation," Conyers said. "I can tell you with certainty that legislative blackmail of this kind by the Republicans will be vehemently opposed by many if not most Democrats, progressives and some Republicans who are concerned with the country's financial budget."

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Rep. Peter Welch, D-Vt., collected 25 signatures by late afternoon Tuesday on a letter to Pelosi calling the deal "fiscally irresponsible" and "grossly unfair."

"The president said the American people agree with his opposition to extending the Bush tax cuts for millionaires and billionaires. He's right, and so are the American people. That's why we should take this fight to them - not walk off the field after the seventh inning," Welch said.

Reps. Raul Grijalva, D-Ariz., and Keith Ellison, D-Minn., said in a written statement that Democratic congressional leaders need to "hold firm on passing a middle class tax cut with no strings attached."

"Tax breaks for billionaires don't create jobs," Grijalva and Ellison said.

Some House Democrats said privately they approve of the deal but worried about their ability to sell it to constituents.

Rep. David Scott, D-Ga., one of two black fiscally conservative Blue Dog Democrats, was urging fellow Democrats to look at the entire tax deal before panning it.

"The most important thing it will do is give the American people a sense of certainty," Scott said. "It's a deal with many parts. The intelligent thing to do is look at all the points. I think we're going to have a good talk about this."

It was unclear Tuesday just how the measure might change. Some lawmakers suggested raising the proposed estate tax rate, or perhaps approving only a one-year extension.

"We'll see where the votes are when we're all done," Reid said.



Source: (c) 2010, McClatchy-Tribune Information Services. Distributed by Mclatchy-Tribune News Service.


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