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Wednesday, December 15, 2010

Obama's Earmarked Tax Cut Deal Creates GOP Revolt! Pay To Play

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Revolt: Republicans Angry About Omnibus Spending Bill Decry 'Total Mess'

Republicans poring over a 1,924-page overarching spending bill proposed by Democrats to cover the rest of the fiscal year are threatening to grind the legislation to a halt, citing massive earmark spending, which, if passed, would be enacted into law without debate in the full Senate.

Two sources who spoke to Fox News are describing the legislation as "a total mess."

But the head of the Senate Appropriations Committee, Sen. Daniel Inouye, D-Hawaii, said he believes the legislation must pass.

"The twelve bills included in this package fulfill the Congress' most basic responsibility, to exercise the power of the purse," he said in a statement. "This measure reflects a year's worth of work by members of both parties. Together, we have closely scrutinized the president's budget request, held hundreds of hearings, thousands of meetings, and asked literally tens of thousands of questions to each and every federal department and agency seeking justification for how taxpayer dollars are being spent."

Sen. John Cornyn, R-Texas, responded in a statement, saying that after neglecting to pass a budget, "today we learn Senate Democrats now want to sandwich them together, totaling almost 2,000 pages, and jam them through in the waning moments of this lame duck session before anyone can read them. This political end-around reveals just how quickly my colleagues across the aisle have already forgotten the voters' message in November."

Though none of the spending bills has passed the Senate, all the individual appropriations bills have been through the full committee process. In an afternoon release, the Appropriations Committee website listed all of the requested earmarks, winnowed into separate categories that go into making up the 12 separate annual spending bills.

In total, thousands of earmark requests are listed. The financial services earmark chart, for instance, lists 220 earmark requests from dozens of lawmakers, mostly in the House, each worth anywhere from $50,000 to $2.4 million. The largest sum was requested by Inouye and his Hawaii colleague Sen. Daniel Akaka for "Bank on USA" demonstration projects" in their state. The projects are designed to give underserved communities greater access to financial institutions.

Elsewhere, the Department of Defense earmark list, mostly requests by senators, is 29 pages long and individual requests more often are worth $2 million to $5 million each. In that list, Inouye's requests total more than $159 million, including $21 million for a Hawaii Federal Health Care Network. Cornyn's defense spending earmarks total nearly $16 million.

The list was released after a Republican policy lunch that a source said was devolving into pandemonium.

"All hell is breaking loose," the source told Fox News, noting that Sens. Tom Coburn of Oklahoma and Jim DeMint of South Carolina were expected to insist the omnibus bill be read in its entirety by the clerk on the Senate floor before a vote is held. They also were expected to seek debate on all earmarks and any amendments.

If the clerk follows the pace of last year's reading of the health care bill -- 53 pages an hour -- it will take almost 40 hours to read the omnibus bill.

A spokesman for Senate Republican leader Mitch McConnell of Kentucky responded that "all hell is not breaking loose just yet. But I'm sure there will be a robust conversation."

In a news conference, McConnell compared the omnibus bill to the health care legislation last year, calling it a big bill arriving amid cold weather and no one knowing exactly what's in it.

On top of Republican angst, Sen. Claire McCaskill, D-Mo., also is revolting against the Democratic-sponsored bill, saying she will not support an omnibus spending bill unless it includes an amendment proposed by McCaskill and Sen. Jeff Sessions, R-Ala., that calls for a three-year cap in discretionary spending. Democratic leaders told McCaskill on Monday that they would meet a one-year gap, which she rejected, according to sources familiar with the conversations.

But sources said Inouye was confident he had the votes needed to get the legislation passed and sent to the House.

The fiscal year runs from Oct. 1-Sept. 30. Currently, a continuing resolution, the stopgap measure to keep government operational until a budget is passed, is set to expire on Saturday. If another CR or the bill itself isn't passed and signed into law by President Obama by then, the government will shut down.

On the House side, Republican leader John Boehner is apparently warning that if the Senate sends over the bill as it is, "We will work to kill it." House Democrats had hoped to file a year-long CR at the previous year's rates.

Opponents of the package are finding support among conservative groups who describe the legislation as a Democratic attempt to lock in 2010's $3.5 trillion budget for the next year without allowing any spending cuts.

"Despite the dire fiscal crisis the nation faces, with a $13.8 trillion national debt that cannot be paid, and in spite of the American people who are demanding action to cut spending, Congress is busy voting to kick the can for yet another year. A vote for the continuing resolution is a vote for another trillion dollar-plus deficit, and that is simply unacceptable to all Americans. Any politician in Congress that has ever promised to reduce the deficit should vote 'no' on this continuing resolution," Americans for Limited Government President Bill Wilson said in a statement Tuesday.

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Earmarks Used To Lure Support For Tax-Cut Bill

In the spirit of the holiday season, President Barack Obama's tax-cut deal with Republicans is becoming a Christmas tree tinseled with gifts for lobbyists and lawmakers.

There are ethanol subsidies for rural folks, commuter tax breaks for their cousins in the cities and suburbs, wind and solar grants for the environmentalists - all aimed at winning votes, particularly from reluctant Democrats.

The holiday additions are being hung on the big bill that was Congress' main reason for spending December in Washington, long after the elections that will give Republicans new power in January. The measure will extend Bush-era tax cuts, averting big tax increases for nearly all Americans, and keep jobless benefits flowing.

Republicans generally liked that agreement, worked out by Obama and GOP leaders. Democrats generally didn't, hence the add-ons.

It's expected to come to a decisive vote next week, at a total cost by the latest congressional estimate of $857.8 billion.

Almost $5 billion in subsidies for corn-based ethanol and a continuing tariff to protect against ethanol imports were wrapped up and placed on the tree Thursday night for farm-state lawmakers and agribusiness lobbyists. Environmentalists won more grants for developers of renewable energy, like wind and solar.

For urban lawmakers, there's a continuation of about-to-expire tax breaks that could save commuters who use mass transit about $1,000 a year.

Other popular tax provisions aimed at increasing production of hybrid automobiles, biodiesel fuel, coal and energy-efficient household appliances would be extended through the end of 2011 under the new add-ons.

The package also includes an extension of two Gulf Coast tax-incentive programs enacted after Hurricane Katrina to spur economic development in Mississippi, Louisiana and Alabama.

While the add-ons may have won more votes for the Obama-GOP deal in the Senate, their potential impact is less clear in the House, where Democrats have criticized the package as a tax giveaway to the rich.

There's the possibility the added goodies will have opposite the intended effect for some lawmakers. Rep. Jeff Flake, R-Ariz., said the add-ons could turn his fiscally conservative colleagues against the bill.

"You don't want to be accused out there of supporting stimulus three," he said. "It will knock some votes off in the House, but more than anything, it will show the voters out there that things haven't changed with Republicans."

CBO Score Shows Tax Plan Ups Deficit $900 Billion In 5 Years

The Congressional Budget Office released its score Friday on the tax plan hammered out between Republicans and President Barack Obama, showing a $893 billion hit on the deficit over the next five years.

The bulk of the deficit increase comes from loss of revenue -- $756 billion -- with the rest coming from additional direct outlays.

The 13-month extension of unemployment benefits adds less than $57 billion to the deficit.

The highest price item is the extension of the Bush-era tax cuts, which will add more than $400 billion to the deficit, followed by the payroll tax holiday at about $225 billion.

Earlier, Obama enlisted former President Bill Clinton to help sell a compromise tax package negotiated with Republicans to reluctant Democrats.

After meeting with Clinton at the White House, Obama brought him to the briefing room to tout the proposal to reporters, even backing off after a brief introduction to let Clinton do the talking and take questions.

"I personally think this is a good deal, and the best we can get," Clinton said, arguing that the combination of payroll tax cuts, unemployment insurance benefits and various tax credits would help the economy grow.

Acknowledging that the Republican insistence on extending tax cuts to the wealthy would help him personally, Clinton said the compromise meant that both sides had to accept provisions they disliked.

"There's never a perfect bipartisan bill in the eyes of a partisan," Clinton said. "I believe this will be a significant net-plus for the country."

It was the latest salvo by the Obama administration in a battle for public and political support for the plan that combines extended tax cuts from the Bush era with extended unemployment benefits, tax breaks and the payroll tax holiday intended to bolster a sluggish recovery from economic recession.

House Democrats declared Thursday they opposed the package because it would extend the lower Bush-era tax rates for millionaires. They support the stance Obama has championed for years -- extending the current lower tax rates only for those earning up to $200,000 a year, or families earning $250,000, while letting rates for higher incomes return to 1990s levels.

However, Senate Republicans have refused to accept any difference in tax treatment for the wealthy, demanding that all current rates be extended. With the tax cuts expiring at the end of the year, and Republicans able to block any legislation in the Senate, Obama and Democrats face a fast-approaching deadline to reach a deal or see tax bills increase for everyone.

Earlier Friday, Obama told National Public Radio that the tax and benefits package would gain congressional approval because "nobody -- Democrat or Republican -- wants to see people's paychecks smaller on January 1 because Congress didn't act," Obama said in an interview with National Public Radio.

"And I think that the framework that we've put forward, which says not only that people's taxes don't go up on January 1, but also that we extend unemployment insurance for a year, that we make sure that key provisions like the college tax credit, the child tax credit, the earned-income tax credit are included -- that that framework is going to serve as the basis for compromise," Obama said.

The debate over taxes in the waning days of a lame-duck session of Congress illustrated the mistrust and animosity that has built up in the deeply partisan environment on Capitol Hill.

Rep. Gary Ackerman, D-New York, told CNN Friday that the tax plan will need Republican support to pass so that voters in 2012 will know it was not Democrats who approved the measure's projected $857 billion cost.

Obama will have to "get more Republicans than Democrats to make it go through," Ackerman said.

So far, Republicans "haven't said that they're all going to vote for it. They haven't said how many votes they're going to provide," Ackerman said. "This is on our (Democrats') watch. Then they're going to attack us in the next election for increasing the deficit when most of them are going to vote against it. ... Why should the Democrats get all the blame? The Republicans are very good at this. ... They get the credit for everything we do. We get the blame for everything they did that went bad."

Also Friday, conservatives Republicans questioned the tax and benefit package, warning it went against the campaign mantra from November of holding down the deficit.

U.S. Rep. Michele Bachmann, R-Minnesota, told CNN that the package would increase the deficit, adding that "investors are reacting to the increases in the deficit and so we're concerned about that. We want to get on a sound financial footing."

Sen. Jim DeMint, R-South Carolina, vowed earlier this week to filibuster the tax and benefit package to prevent a vote on the Senate floor. He noted that those who ran from the right in the election had said they would oppose anything that increased the deficit.

The Senate will consider the tax package first. On Thursday, Senate Majority Leader Harry Reid, D-Nevada, released the first version of legislation to implement the negotiated deal and said the first vote on it, a procedural one to open debate, would occur Monday.

The Senate version made public by Reid was largely the same as the deal announced by Obama, but it added a one-year extension of a program that provides cash grants in lieu of a tax credit for construction of new solar and wind energy projects. The Treasury Grant Program was part of the 2009 economic stimulus bill.

White House Press Secretary Robert Gibbs told reporters Friday that the additional clean energy provision added $3 billion to the cost of the package. Meanwhile, a letter to House Democratic leaders signed by at least 79 Democratic members called for the provision to be extended for two years.

The negotiated package includes a two-year extension of Bush-era tax cuts set to expire at the end of the year, as well as 13 months of unemployment benefits and a cut of 2 percentage points in the payroll tax. In addition, the plan extends current tax breaks for students and lower-income Americans, and adjusts the estate tax in a way that Democrats believe benefits the wealthy.

However, Bachmann and other conservatives complained that the compromise resurrects the estate tax, which had expired for 2010 but was set to be restored in 2011 at a rate of 55%, with inheritances under $1 million exempted. A bill that passed in the House set the tax rate at 45% and exempted inheritances under $3.5 million, while the provision in the tax deal would exempt estates up to $5 million and set the tax rate at 35%.

To Obama, the bottom line is that legislators from both parties will prevent a tax increase on January 1 by accepting the main components of the negotiated package, including the extension of unemployment benefits.

"At the end of the day, people are going to conclude we don't want 2 million people suddenly without unemployment insurance and not able to pay their rent, not able to pay their mortgage, not able to pay their house note," Obama said, adding that the package also will bolster the so-far sluggish recovery from a recession that has unemployment still near 10%.

"I think that people are also going to understand that the single most important thing we can do for all of our constituencies is to make sure that the recovery that is taking place right now gets stronger," he said, adding that economists have noted the negotiated package would increase growth and could mean more jobs, a development that "has got to be the highest priority for everybody."

He called for legislators "to act responsibly and to think not in terms of abstract political fights here ... on Capitol Hill, but to think about those families that, in the middle of the holiday season, are trying to figure out -- are they still going to have unemployment benefits at the end of this month?"

"I'm confident that we're going to be able to get this resolved by the end of the month," Obama said.

Thursday's vote by the House Democratic caucus was a defiant rejection of both the agreement on tax and benefit measures, as well as what many Democrats in the chamber perceived as being marginalized in the talks by the White House.

"This message today is very simple. That in the form that it was negotiated, it is not acceptable to the House Democratic caucus," said Democratic Rep. Chris Van Hollen of Maryland, who represented House Democrats in the negotiations. He pledged to "work with the White House and our Republican colleagues to try and make sure we do something right for the economy and right for jobs."

During their meeting, caucus members chanted "Just say no," according to two Democrats in attendance, and Rep. Laura Richardson of California later asked reporters outside the room: "Did you hear us saying 'Just say no'?"

Overall, Republicans generally appear supportive of the package, which White House advisers noted gave them their two main priorities -- an extension of the lower tax rates from the Bush era to everyone, including the wealthiest Americans, and setting a lower-than-expected estate tax rate only on inheritances of more than $5 million.

Both provisions angered liberal Democrats, who oppose extending the lower tax rates enacted in 2001 and 2003 to the wealthy. Some said Obama should have forced a showdown with Republicans over the tax cut extensions by holding out longer to force more GOP concessions.

However, Obama and White House aides said the deal reached in negotiations was the best they would get from unyielding Republicans, who will take control of the House and enjoy a stronger minority stake in the Senate when the next session of Congress begins in early January.

Gibbs told reporters Thursday that he expected Congress to pass a package this year because the alternative was higher taxes for everyone after December 31.

"At the end of the day, members 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 their taxes have gone up by several thousands of dollars," Gibbs said, noting that the deal is a compromise with elements unpalatable to both sides. "If everybody took out what they didn't like, we'd have nothing. And we know the consequences of doing nothing."

A top Democratic adviser to the White House added that Senate Democrats "have several vehicles they can use" as the legislative base for the tax plan, and are working on a plan to pass a tax bill and "then jam the House" with that legislation.

Some House Democrats say they will support the tax package as a compromise made under tough circumstances.

"If it passes the Senate and this is the compromise the president of the United States has committed to, what are we going do in the House, hold this up?" said Rep. Shelley Berkley of Nevada.

Will Congress Find Funds For Obamacare & Lots of Pork Under the Tree This Christmas?

Last Christmas Eve, the U.S. Senate gave Americans the lump of coal known as Obamacare. This year, they may take even more of our money to fund it and also force us to buy a pork-barrel full of thousands of earmarks. In a 212-206 vote, House Democrats pushed through a flawed continuing resolution yesterday that funds Obamacare and extends overall funding for the next year at reckless 2010 levels.

As Sen. Tom Coburn has pointed out, the House-passed bill contains significant Obamacare funding, which is why Coburn called the bill a “Trojan Horse to Fund New Health Law.”

Now the focus shifts to the Senate, where efforts are underway to amend the House-passed version—and not for the better.

Senate Democrats will offer an amendment to make it even worse with a full-blown omnibus appropriations bill packed with pork-barrel earmarks, spending increases, and even more funding for every top Obama administration priority. And unfortunately, some Senate Republicans may be poised to help the Democrats pass it.

Rumors are swirling that despite the fact Senate Republican leader Mitch McConnell pulled the plug on official Republican support for the omnibus, a small group of rogue Republican appropriators are playing ball, planning to vote for the massive bloated spending bill in exchange for a parting Christmas gift of pork-barrel goodies for their states.

The most likely to play ball are three retiring appropriators: Kit Bond of Missouri, George Voinovich of Ohio, and Robert Bennett of Utah who will never face voters again. Plus, there's also the highest-ranking Republican appropriator: Thad Cochran of Mississippi.

We don’t know which earmarks made it into the omnibus yet but we do know that Kit Bond requested 142 earmarks this year totaling over $600 million. George Voinovich requested 172 earmarks totaling over $460 million, Robert Bennett requested 321 earmarks topping $1.3 billion, and Thad Cochran requested a whopping 712 earmarks totaling over $2.4 billion.

Other Republican senators worth worrying about identified themselves last week when they voted against the Coburn-McCaskill amendment to ban earmarks: Susan Collins (R-Maine), Jim Inhofe (R-Okla.), Dick Lugar (R-Ind..), Lisa Murkowski (R-Alaska), and Richard Shelby (R-Ala.).

These nine Republicans must be urged to abide by the wishes of the American people and to learn the same lesson Mitch McConnell, himself an appropriator, made clear in his wonderful Senate floor speech embracing the earmark moratorium:

“Nearly every day that the Senate’s been in session for the past two years, I have come down to this spot and said that Democrats are ignoring the wishes of the American people. When it comes to earmarks, I won’t be guilty of the same thing.”

Unfortunately, despite our best efforts, some Republicans may vote for the Democrats’ pork-packed, Obamacare-funding omnibus monstrosity.

That’s why pressuring Democrats is critical, starting with the ones who voted in favor of the Coburn-McCaskill earmark ban.

Claire McCaskill herself is the most likely Democrat to oppose the omnibus. Unlike her pork-loving Republican colleague Kit Bond, McCaskill has requested no earmarks this year and has long been a proponent of reform. This vote will test whether, when the rubber hits the road, she is really willing to vote to stop a rolling pork-barrel.

The other Democrats who voted with Coburn include Evan Bayh (D-Ind.) and Russ Feingold (D-Wis.), neither of whom requested any earmarks this year, along with Michael Bennet (D-Colo.), Bill Nelson (D-Fla.), Mark Udall (D-Colo.) and Mark Warner (D-Va.). They will be put to the test of whether their earmark reform was sincere when they have the opportunity to stop the omnibus.

Moreover, all senators need to be forcefully reminded that this will be the first vote on funding Obamacare, a signature issue that will loom large in the 2012 election.

The bottom line is that this Congress had all year to do its job and pass legislation to fund the government before the November midterm elections. They failed. They should not now be rewarded with a massive omnibus spending bill on their way out the door.

Sen. Coburn got it exactly right when he said: “It’s time for Congress to extend current tax rates, pass a clean spending bill – a ‘continuing resolution’ -- without extraneous and vague health care provisions, and go home.”

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Sources: AZ Central, CBO, CNN, Fox News, MSNBC, Zimbio, Wikipedia, Youtube, Google Maps

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