House Democrats seek
changes to Obama's tax-cut deal
By Lori Montgomery and Shailagh Murray
Washington Post Staff
Writers
Thursday, December 9, 2010; 4:06 PM
The House Democratic Caucus voted Thursday to try to block the tax-cut deal
that President Obama struck with Republicans, a move that does not kill the
legislation but shows that its opponents are digging in.
Rank-and-file Democrats passed a nonbinding resolution, introduced by Rep.
Peter A. DeFazio (D-Ore.), by voice vote that said the tax package should not
come to the House floor for consideration.
And in her first explicit declaration of dissatisfaction since the tax deal
was cut, House Speaker Nancy Pelosi (D-Calif.) suggested that she would not
bring the package to the floor in its current form.
"House Democrats share the President's commitment to providing the middle
class with a tax cut to grow the economy and create jobs" but "reject the Senate
Republican tax provisions as currently written," Pelosi said. " We will continue
discussions with the President and our Democratic and Republican colleagues in
the days ahead to improve the proposal before it comes to the House floor for a
vote."
After the caucus vote, House Majority Whip James E. Clyburn (D-S.C.) said,
"People would like to see every opportunity to make revisions, and I'm one of
them." Asked whether he still expected the tax deal to come to the House floor
for a vote, Clyburn said, "I don't make those decisions."
Said Rep. Lloyd Doggett (D-Tex.): "If it's take it or leave it, we'll leave
it."
At one point during the meeting on the vote, House Democrats erupted in a
chant of "Just say no!"
The White House downplayed the drama.
"If there are ways to strengthen the framework that are agreeable to
everybody and strengthen the coalition, that's good," White House press
secretary Robert Gibbs told reporters at his daily news briefing.
Gibbs predicted that "at the end of the day Congress will give the American
people a vote on a plan that prevents their taxes from going up by several
thousand dollars at the beginning of the year, that will prevent millions from
losing their unemployment insurance, and, as this agreement does ... give strong
incentives for job creation and economic growth."
Members of Congress "are not going to want to be in their districts, senators
are not going to want to be in their districts, when their constituents find out
on the first of January that their taxes have gone up by several thousand
dollars," Gibbs said.
Even as House Democrats expressed their unhappiness, however, larger forces
were rallying around the tax deal. On Thursday afternoon, the White House
released a letter from the United Auto Workers, a labor group influential in
Democratic policies, announcing its support for the package.
"This legislation will provide much-needed support to American families who
are struggling to find work, to keep businesses afloat and to keep their
families fed, clothed and housed. Moreover, it will provide urgently needed
stimulus to grow the economy and create jobs," said the letter from Barbara
Somson, UAW legislative director. "While we are disappointed by the inclusion of
costly income and estate tax giveaways to the wealthiest Americans, the UAW
urges you to vote for this less than perfect compromise."
Senate leaders are planning to begin debate on the far-reaching tax package
as soon as Thursday.
Democrats are still angry about what they view as Obama's capitulation to GOP
demands to preserve tax cuts for the wealthiest Americans, particularly a deal
to exempt estates worth as much as $10 million from a revived inheritance tax.
But some lawmakers said the magnitude of the concessions Obama won came into
sharper focus Wednesday as the White House highlighted independent forecasts
predicting that the package could create as many as 2.2 million jobs next year.
For a second day in a row, White House officials made the rounds on Capitol
Hill, stressing the economic significance of their deal with Republican leaders
to preserve tax cuts that are set to expire on New Year's Eve, extend long-term
unemployment benefits through next year, and create major new tax breaks for
businesses and individuals aimed at spurring investment and consumer spending.
While Vice President Biden and House Democrats met into the evening, White
House budget director Jacob Lew and senior Treasury adviser Gene Sperling held
an afternoon session to field questions from Senate Democrats, who were more
accepting of the package than they were a day earlier in a meeting with Biden,
participants said.
"Members are more open today as they read the analyses of this package," said
Sen. Richard J. Durbin (Ill.), the chamber's No. 2 Democrat. Citing prominent
liberals such as John Podesta, head of the Center for American Progress, and
Robert Greenstein, executive director of the Center on Budget and Policy
Priorities, who endorsed the White House plan, Durbin said, "These are people
that progressives respect and go to, and they've said positive things."
Durbin added that "I just loathe" parts of the deal, such as the provision on
the estate tax. But he said: "I understand the predicament that we're in."
Biden faced a far tougher crowd in the House, where a fractious caucus
dominated by angry liberals is emerging as the bigger legislative obstacle to
the tax plan. During a two-hour meeting, dozens of lawmakers lined up to
interrogate the vice president about the deal - almost all of them speaking in
opposition, participants said.
"There remain very serious reservations on the House side. I think that
there's still a very serious question whether this package can pass in the form
it's in now," Rep. Chris Van Hollen (Md.) said afterward. Van Hollen represented
House Democrats in bipartisan talks about the tax cuts that were rendered moot
when the White House began dealing directly with Republican leaders, a slight
that rankled nearly as much as Obama's decision to abandon the long-held
Democratic position of opposing tax breaks for the wealthy.
Many Democrats, including Clyburn, the third-ranking House leader, emerged
from the meeting saying they could not support the package unless major elements
were changed, particularly the estate tax provision.
Most Democrats would prefer to renew the tax, which lapsed last year, with a
45 percent rate on estates worth more than $3.5 million for individuals and $7
million for couples. The Obama-GOP deal would impose a 35 percent tax on estates
larger than $5 million for individuals and $10 million for couples for the next
two years. If that change were made permanent, it would add $100 billion to
deficits over the next decade, Democrats said.
In a forceful presentation, however, Biden made it clear that big changes are
not in the cards. "The vice president said: 'This is the deal. Take it or leave
it,' " an irritated Rep. Henry A. Waxman (Calif.) said, paraphrasing Biden.
The tax debate is a central piece of a broader strategy to wrap up the
legislative session by Dec. 17. The House and the Senate are scrambling to
complete unfinished business. This includes a major resolution to continue
funding the federal government through Sept. 30, approved by the House on
Wednesday, as well as smaller measures, such as a plan to protect doctors from a
sharp cut in Medicare payments, which cleared the Senate by voice vote Wednesday
night.
Obama wants the Senate to ratify the New START nuclear arms pact with Russia,
but it could face time constraints, depending on whether Majority Leader Harry
M. Reid (D-Nev.) can find the votes to advance a defense authorization bill that
includes a repeal of the "don't ask, don't tell" policy, which bans gays from
serving openly in the military. A decision on the Pentagon bill is expected
Thursday.
Meanwhile, the White House embarked on an aggressive campaign to advance the
tax package, issuing a series of announcements touting Democratic endorsements
of the legislation. The list included Detroit Mayor Dave Bing; Michael B.
Coleman, the mayor of Columbus, Ohio; Michigan Gov. Jennifer M. Granholm; Rep.
Chet Edwards (Tex.); and Sens. John F. Kerry (Mass.) and Blanche Lincoln (Ark.).
In the Senate, lawmakers said they were warming to the package as they pored
over the details of its provisions and reflected on the consequences of
inaction: tax increases for virtually every American worker, beginning Jan. 1.
One of the first Democrats to sign on to the deal was Sen. James Webb (Va.),
who is among 23 Senate Democrats facing reelection in 2012. "The proposal is the
ultimate stimulus plan," Webb said in a statement. "It will put more money
directly into the pockets of people and small businesses, allowing that money to
be quickly recycled as the economy expands."
Lawmakers in both parties said they will seek to change the package through
the amendment process. Sen. Jon Kyl (R-Ariz.) said some conservatives are
pushing a plan that would cover the cost of another year of jobless benefits -
about $56 billion - by cutting spending elsewhere.
Meanwhile, a bloc of Democrats was circulating a proposal to add provisions
that would trigger a broad deficit-reduction plan next year if the economy
improved.
"There's a legitimate case to be made for short-term stimulus," said Sen.
Mark Warner (Va.). "But if you don't create a path to long-term
deficit-reduction, you're just borrowing $900 billion." But he added that
Congress must reach a compromise on the expiring tax cuts before adjourning for
Christmas.
montgomeryl@washpost.com murrays@washpost.com
Staff writers Paul Kane and Felicia Sonmez contributed to this report.
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Washington Post Company