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Friday, December 10, 2010

Pelosi Defies Obama, Holds Worried Taxpayers "Hostage"; Obama Stands Firm

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Democrats Blast Obama-GOP Deal

Disappointed congressional Democrats Tuesday night continued to blast the White House's tax deal with Republicans despite a spirited argument by President Barack Obama that concessions were preferable to higher taxes for millions of Americans.

"I'm not here to play games with the American people or the health of the economy," Obama said of his day-old deal, which is designed to avert a scheduled Jan. 1 expiration of tax cuts at all income levels.

In a remarkable political role reversal, Republicans lined up to support the package, while lawmakers of the president's party said they were prepared to oppose it. Liberal Sen. Bernie Sanders, I-Vt., pledged to "do everything I can to defeat this," including a filibuster to prevent a final vote.

The deal includes an extension of expiring Bush-era tax cuts for all income levels — not just for lower and middle-income taxpayers, as Democrats wanted. It also contains a renewal of jobless benefits due to expire in a few weeks, and a one-year cut in Social Security taxes paid by workers.

Other elements would loosen the estate tax and provide breaks for businesses to spur hiring. Officials said that overall, the proposal could add $900 billion to the federal deficit over two years.

Dem leader: Compromise is 'not done yet'
Democratic opposition focused chiefly on two parts of the deal that marked concessions to Republicans — the decision to let expiring tax cuts remain in effect for people in upper incomes, and a change in the estate tax that the GOP has long sought.

After meeting with other Democratic leaders, House Speaker Nancy Pelosi said that "so far the response has not been very good" to the proposed deal.

She was described to NBC News as having a poker face during a Tuesday night closed-door caucus meeting in which other members said they had problems with Obama's compromise.

House Democratic leader, Rep. Chris Van Hollen of Maryland, said afterward he cannot recommend the package to his colleagues.

"The question is what is the best deal you can get and whether you really needed to have, for example, this provision with respect to the bonanza for the wealthiest estates in the country," he said, according to NBC News.

Pelosi called the estate tax provision "a bridge too far."

Overall, officials said, the proposed compromise deal could increase federal borrowing by $900 billion.

"I don't think that the president should count on Democratic votes to get this deal passed," said Rep. Anthony Weiner of New York. "It's a bad deal that wasn't skillfully negotiated."

Among other caucus members expressing concerns, NBC News said, were Ways and Means Committee Chairman Sander Levin, D-Mich., Rep. Lynn Woolsey, D-Calif., outgoing co-chair of the Progressive Caucus, and Rep. Jim Himes, D-Conn., who called the compromise "just not acceptable to people."

The compromise is "something that's not done yet," said Senate Majority Leader Harry Reid, D-Nev. "We're going to have to do some more work," he said after a closed door meeting with Vice President Joe Biden and members of the Democratic rank-and-file.

At his hastily called news conference, Obama bristled at times, casting himself in the role of compromiser-in-chief with the best interests of the economy and public in mind.

"This isn't an abstract debate. This is real money, It will make a real difference in the lives of people who sent us here," Obama said.

The presidential news conference was part of a full-scale defense of the agreement, which the White House said would pump billions into the economy at a time it is recovering from the worst recession in eight decades and unemployment stands at 9.8 percent.

President critical of both sides of the aisle
The president was critical of Democrats and Republicans, saying that if purely partisan attitudes rule, compromise would be impossible.

At one point, he appeared to liken Republican lawmakers insisting on tax cuts for the wealthy to terrorists.

"I think it's tempting not to negotiate with hostage takers, unless the hostage gets harmed. In this case the hostage is the American people and I was not willing to see them get harmed," he said.

But he also rejected criticism from Democrats. "I know there are some who would have preferred a protracted political fight," he said. But he added he had decided that compromise was preferable to letting taxes rise on Jan. 1.

The events left Democratic leaders struggling to avoid a major fight with the president, at a moment that they are hoping to complete work on several measures before Republicans take control of the House in January. Most prominently, Obama wants the Senate to ratify a new arms control treaty with Russia.

Sen. Joe Lieberman of Connecticut, a Democrat-turned-independent, urged support for the plan. "This tentative agreement is an example of Washington working across party lines to confront the challenges facing our nation," he said.

But organized labor, the liberal group and others criticized the deal.

In public and private, Democrats expressed anger that Obama had bowed to Republican demands to extend the expiring tax cuts on the wealthy and make additional concessions to the GOP on estate tax relief.

Some Democrats who met with Biden quoted him as saying the deal was the best the White House could obtain from Republicans, who had staunchly blocked legislation over the weekend to extend tax cuts only on incomes below $200,000 for individuals and $250,000 for couples.

Sen. Tom Harkin, D-Iowa, said he intended to oppose the new proposal barring changes. "It didn't wind up in a good end. The deal as struck is not the best deal for our country," he said.

Others questioned whether the deal would spur the economic growth enough to outweigh the additional damage it would do to the already disastrous debt situation.

"If we don't vote for this, what happens — not politically, but economically? If we do vote for it, how sure can we be that it will, in effect, spawn jobs and pump the economy?" said Sen. Dianne Feinstein, D-Calif.

Other parts of the plan
Besides holding current tax rates in place for all, the proposal would extend unemployment benefits and reduce payroll taxes for a year, avoiding a threatened cutoff in checks to two million over the holidays and as many as another five million next year.

The proposed Social Security tax cut would apply to virtually every working American. For one year they would pay 4.2 percent of their income, instead of 6.2 percent, to the government retirement program, fattening U.S. paychecks by $120 billion in 2011.

Someone earning $40,000 a year would receive a $800 benefit, and a $70,000 earner would save $1,400, officials said. More than three-fourths of all Americans pay more in these so-called payroll taxes than in federal income taxes.

The White House said money from other sources would be shifted so the Social Security trust fund loses no revenue.

Obama said he reluctantly made another concession to Republicans, concerning the estate tax. It would tax estates worth more than $5 million at a rate of 35 percent, a GOP goal. Democrats favored a $3.5 million threshold, with a 45 percent tax on anything higher.

Obama's willingness to compromise with Republicans comes a month after the GOP won resounding victories in congressional, gubernatorial and state legislative elections.

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Obama Predicts Success For Tax Deal

President Barack Obama said Friday he's confident that Congress will pass a compromise tax package despite the objections of House Democrats.

"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."

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.

Democrats voted Thursday against considering the tax package that Obama negotiated with Republicans, raising questions over the president's influence in his own party.

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.

Sources: CNN, MSNBC,

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