Wednesday, December 8, 2010

Obama defends tax compromise with GOP

Democrats in Congress split apart Tuesday over an agreement between the White House and Republicans to extend expiring income tax cuts for the wealthy despite a push by President Obama to deflect criticism from within his own party.

But while they balked and in some cases blasted the plan, which would extend Bush-era tax cuts for all income levels, a wide swath of Democrats left open the possibility of supporting the deal to avoid tax increases for millions of middle-class Americans.

A day after announcing the "framework" of an agreement with Republican lawmakers, the White House sought to convince wavering Democrats that failing to keep the 2001 and 2003 cuts in place would have a devastating effect on unemployment in 2011. Currently, 9.8% of American workers are unemployed.

"I'm not here to play games with the American people or the health of our economy," Obama said during a news conference. "My job is to do whatever I can to get this economy moving."

On Capitol Hill, Vice President Biden spoke at a closed-door meeting of Senate Democrats to make the administration's case. Nebraska Sen. Ben Nelson, a conservative Democrat, said Biden characterized the proposal as a "bad situation, but a good deal."

The agreement, announced Monday, would extend for two years income tax cuts that will otherwise expire at the end of the month. The deal would also continue extended unemployment benefits for 13 months. Without an extension, 7 million workers would have lost benefits in the coming year. Further, the deal cuts Social Security taxes by 2 percentage points and reduces the estate tax.

Reaction to the meeting with Biden varied. Sen. Tom Harkin, D-Iowa, said Democrats "bargained too soon" and said he didn't think he could support the bill.

Sen. Joe Lieberman, a more conservative independent from Connecticut, called the measure an "economic recovery program" and predicted that half of Senate Democrats would support it.

"I think the president did largely what the situation required," said Sen. Kent Conrad, D-N.D., the Senate Budget Committee chairman. "If we keep our eye on the main issue, which is securing the economy ... the president did about what he had to do."

Sen. Mary Landrieu, D-La., called the agreement "almost morally corrupt," but like many of her Democratic colleagues, she stopped short of saying she would vote against it. "If I wind up voting for this package, I will not do it silently," she said.

Democrats, including Obama, long asserted they would extend the tax cuts only on taxable income below $250,000 for a family. Republicans argued high earners should not pay more tax on income above the $250,000 threshold and threatened to filibuster the Democrats' plan.

"I'm as opposed to the high-end tax cuts today as I've been for years," Obama said during his press conference. "And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle-class tax cuts that I've championed and that they've opposed."
But some of the strongest pushback from Democrats on Tuesday came not on the income tax provisions, but rather on proposed changes to the estate tax. The deal would let couples pass $10 million onto heirs tax-free. Inheritance beyond that would be taxed at 35%.

Senate Majority Leader Harry Reid, D-Nev., said a number of senators raised concerns about that proposal during the meeting. Reid suggested Democrats would try to make some changes to the agreement.
It is unclear how much Republicans — who made big gains in the November election — are willing to negotiate. "The agreement has been reached," said Arizona Sen. Jon Kyl, the second-ranking Republican in the Senate, when asked about the party's willingness to make changes.

House Democrats were also indignant. House Speaker Nancy Pelosi, D-Calif., sent a message on Twitter that Republican provisions would "add tens of billions to deficit."

House Majority Leader Steny Hoyer, D-Md., summed up the frustration expressed by many in his party about the decision ahead: put up with the tax cuts for high-income families or risk a continued stalemate that would jeopardize the tax cuts for everyone.

"At a time when the deficit is at unacceptable levels, giving tax cuts to high-income Americans is not appropriate," he said. "On the other hand, raising taxes on middle-income Americans is not appropriate either."


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